BBB: Gift cards a simple solution – but use caution at purchase

12/15/2012 7:21 AM

12/15/2012 7:26 AM

Gift cards are the go-to gift for many during the holidays. For those who are hard to buy for, a gift card may be a simple solution. They are easy to mail, easy to find and don’t need wrapping. People like to receive them. Surveys show that fully 60 percent of folks say they enjoy receiving gift cards.

Nearly half of holiday shoppers plan to give gift cards this year, according to Consumer Reports.

It’s not hard to understand why retailers love to sell gift cards.

Consider this statistic: Over $41 billion worth of gift cards went unused from 2005 to 2011. Estimates from the National Retail Federation are that shoppers will spend over $28 billion on gift cards during this year.

The Better Business Bureau advises that, in spite of the many upsides to giving gift cards, consumers should take precautions when buying and receiving them.

Here are some tips to consider when buying or receiving gift cards:

• Watch out if you’re considering buying a gift card from an online auction site or classified site like Craigslist. Those cards may be counterfeit, may have been obtained by fraudulent means, or may have a lower value than originally stated.
• If you buy the card online or over the phone, find out if there are shipping and handling fees.
• Read the fine print before you buy. There may be a fee tacked on just for purchasing. Check whether fees can be deducted from the card’s value after it’s purchased.
• Inspect the card carefully before you buy it at a retailer’s site. Verify that none of the protective stickers have been removed. Be sure the PIN number on the card has not been revealed. If the card has been tampered with, report the damage to the retailer at once.
• Consider giving the recipient the original receipt so they’ll have proof if the card is lost or stolen.
• Verify that the retailer or restaurant from which the card comes seems likely to stay in business. If the business declares bankruptcy under current laws, the prospects of redeeming the card can range from slim to none.
• Remember when receiving a card that it is best to treat it like cash. Use it quickly to assure that you get the card’s full value.

One scam that has been reported lately involves gift cards sold on large racks in some stores. Photos are taken of the back of the card where there are activation codes and a customer service number to call when checking on a card’s value. Scammers then replace the card on the rack. They make purchases online with the information obtained. An unsuspecting legitimate user of the card is later surprised to find out that is has little or no value.

Under federal law, gift cards cannot expire for at least five years. You cannot be charged a fee if you have used the card within the past 12 months.

A proposed Gift Card Consumer Protection Act in the U.S. Senate would ban gift card expiration dates and non-use fees. Companies filing bankruptcy would be denied the right to sell gift cards and would have to honor any unredeemed cards.

If you’re among the millions who will give or receive a gift card during this holiday season, enjoy the convenience but consider the strings that may be attached.

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