Posted on 10/18/2006 9:32:22 AM PDT by Diana in Wisconsin
quit gift giving...perish the thought.
While I would not spend big amounts, gift giving is a family tradition. Though stressful, it is one worth keeping.
How about if the goverment put bar codes on money and if you didn't spend it within a year, it lost its value? Sounds like something Congress would like.
I don't see any fraud.
It is not the problem ofthe establishment selling the gift card if people don't redeem them becuase they move, they lose them, they just never get around to using it, or whatever.
The bad part is when a gift card has a fee or a monthly charge that slowly makes them worthless.
If you look at the big picture. Home depot's #1 selling item is their gift card. The "breakage" is normally 15%. Meaning 15% of gift cards do not get redeemed or 15% of the total $ value of gift cards do not get redeemed.
It is not like they have some way of making sure you don't redeem the cards.
I agree with most of your statement but I cannot agree that "there is something going on,"in regards to Home Depot.
As I stated in my post there is about 15% margin of people who do not use either, their gift card at all or the full value of it. Add that to the fact that Home Depot's #1 sales item is their gift card.
Do you think Home Depot could sell $286 million of their most popular selling item? Yes they can and 15% of that total value of sales($43 million) will probably not be redeemed. This is not some scam by Home Depot to keep you from redeeming your gift card. It is the end user not using the gift card(lost it, forgot they had it) or not using the full value of the gift card. Period.
I don't know how this is Home Depot's fault or any retailers fault.
What I meant is what do propose the stores do with the money collected from the cards until they are redeemed? Do they place it in escrow?
That is the crux of the problem and why stores have expiration dates on the cards. If the cards were given an infinite life then the companies have an liability on the books forever in many cases.
By having expiration dates and declining value over time, this gives the companies a way to gradually rid themselves of the liability over time for cards that aren't going to be used.
-PJ
Some states are moving to have them turned over to the states unclaimed property division (escheatment). The problem is when they are purchased they do not who the owner is.
It's Home Depot's fault that some people don't use their gift cards? Is it the water companies fault when you don't pay your bill and they charge you a fee?
Sometimes I really do think that I've stumbled onto DailyKos - all that is missing is a workers of the world unite speech.
This really does lend credence to the theory that when you go far enough to the right politically that you end up wrapping around and connecting with the far left.
Either fraud and theft are illegal or they or not.
No ther is nothing going on with respect to Home Depot, but it merely demonstrates that apparently a lot of people are getting caught up in this. Earlier in the article it noted that many retailers bank on a certain percentage not being redeemed.
You are always going to have lost or misplaced gift cards that do not get redeemed, that's a natural given. I just think that, at the very least, there needs to be clearer and upfront information spelled out on the card so that someone, like me, doesn't hang on to a gift card for a rainy day only to find out that the retailer confiscated the value!
That will end up hurting business severely for major retailers in their state as gift cards will become unprofitable.
Actions like this will sink most major retailers like Best Buy and all that will be left is Walmart. Major retailers lose money for most of the year and only break even during on "black Friday", the day after thanksgiving.
A significant number of the purchases made during the Christmas season are gift cards. If governments made the gift cards unprofitable then they are going to destroy a lot of businesses.
"How do you book the transactions to the general ledger?"
Accountants know how to do it. A conservative way would delay recognizing sales and profits, until the merchandise is selected and delivered.
"Unearned revenues"
Accounting used to be conservative.
Don't make your discipline my law. ;)
I like how your mind works. You sound like an accountant, like me! :)
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