Posted on 10/18/2006 9:32:22 AM PDT by Diana in Wisconsin
It has taken a few years, but state legislatures are catching up with glitches in the popularity of gift cards, the quick-fix solution for those too befuddled or time-pressed to find the perfect present.
At least 25 states have strengthened their consumer protections for the credit-card-sized scrip that more Americans now give in lieu of a hand-picked, boxed-and-bowed gift, according to the National Conference of State Legislatures. U.S. shoppers are expected to spend as much as $72.8 billion in 2006 on gift cards. But only in three states can consumers be guaranteed that their gift cards will be worth full value when they go to spend them at a store, restaurant or online.
Around the country, expiration dates and “processing fees” are the bane of gift card users. Shoppers might find the value of their cards eaten away by fees charged by retailers and banks – or stripped to zero if too much time elapses between when the cards were purchased and redeemed.
Starting in 2004, lawmakers in many states began responding to consumer complaints by introducing bills that would have forbade all fees and made the cards’ value perpetual. But that type of legislation rarely survived, and today only Connecticut, Montana and Rhode Island prohibit all fees and expiration dates. California, which started the movement with its gift card law of 1996, prohibits expiration dates but allows fees in certain circumstances.
More typical is Kansas’ new law, an example of the compromises that lawmakers and business groups often reach on the gift card question. Sponsored by state Rep. David Huff, a Kansas City-area Republican, the idea for the law came in 2003, after one of Huff’s constituents bought his wife a $100 gift card to a spa and the card expired before she could redeem it, meaning the money was lost.
Huff introduced a bill that would have prohibited gift cards from expiring and taken effect on July 1, as with most Kansas legislation. But after lobbying from retailers’ groups, the final bill only guarantees that cards will be valid for at least five years after purchase, and involve no fees within one year. Also, the new law won’t take effect until Jan. 1, 2007, after this year's holiday shopping season.
“They were not that enthused,” Huff said of businesses’ reaction to the bill.
Huff said part of the opposition came from businesses that count on a certain number of gift cards to be forgotten under Christmas trees or to flutter out of birthday cards. Unredeemed cards can add up to a lot of pure profit: Home Depot, the nation’s second-largest retailer, announced in 2005 it had made $43 million from gift cards it didn’t expect to be redeemed. About 10 percent of the value of gift cards in the United States goes unredeemed each year, said Dennis Moroney, an analyst with the financial research firm TowerGroup.
There are two main types of gift cards: store-issued cards that work like cash when redeemed at cash registers or online, and cards issued by banks and credit businesses such as Visa or American Express that can be redeemed anyplace that takes credit cards.
Retailers’ groups say that the fees go to third-party vendors who handle and process the cards, and complain that the variety of different state regulations can confuse consumers. Advocates for bank-issued gift cards say fees and limited-use dates help keep the cards’ overall costs down for consumers. Unlike retailers’ cards, banks and credit card companies charge an upfront fee for gift cards in addition to the value buyers add.
Some large retailers, including Wal-Mart, Target and The Gap, voluntarily don’t charge service fees or impose expiration dates on their gift cards. Chain restaurants also avoid the restrictions, according to the National Restaurant Association; even if restaurant patrons wait a few years to redeem a gift card, they tend to spend more money than the card is worth.
"While I would not spend big amounts, gift giving is a family tradition. Though stressful, it is one worth keeping."
That's fine! I'm not preachin'! Do what works for you, of course.
On my husband's side of the family, we now pool our $30 "gift stipend" each and give it to charity each year. Those of us that care to, get up and give little presentaions on which charity we want the money to go to, then we vote as a Family. Last year we gave it all ($600) to Juvenile Diabetes, as one of the Grandkids was diagnosed that year. (Skinny, hyper little Elliott. Who would've guessed?) The year before we gave it to a local Nursing Home, then the year before that we gave it to Africa to build a water-well in some obscure town. (My liberal SIL won that year with her impassioned plea; but that's what Family Democracy is all about!)
This year, I'm re-doubling my efforts to get that cash to The Disabled Veterans of America; a group I've campaigned for for years. I'll win ONE of these years. I'll wear them down, I swear, LOL!
We (each couple) get a $60 tax deductible receipt each year. It may SEEM selfish, but we're throwing money at projects we deem worthwhile and we all sleep very well at night, thank you!
And that works for me. :)
"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."
Brilliant! Guess I'd better "cash in" all those Wheat Pennies I've been saving since High School, Eh? ;)
"This kind of crap makes me more willing to spend a little extra time and find an actual gift."
Freepmail me for my mailing address, would you please...since you're already in the Holiday Spirit. I want to make sure I'm on your Gift List, LOL!
I don't disagree with that for one minute...but I see no problem with businesses putting parameters on the "convenience" that they are SELLING us for neglecting to actually CHOOSE a gift for friends or loved ones if we CHOOSE to buy them a Gift Card, versus a hands-on, tangible gift.
Example: Why pay $3.00 for a stick of Beef Jerky at the local "Convenience Store" when you can get the same product for $1.50 at Wal-Mart? It's the "Convenience Factor" my FRiend.
I see this with Credit Cards, too. I mean, if you're too lazy, too broke or too unorganized to pay your bills on time, then a credit card is offering you the convenience of delaying payments, buying things you don't have any money for in the first place, or allowing you a 20-30 day "grace period" to get the goods and service you want (WANT; not need) while you're tying up THEIR capitol.
Why do people confuse these two concepts? It's a SERVICE they are offering you. One that you are obviously willing to pay for to have. I mean, if you thought a Gift Card or a Credit Card were a rip-off, then why not get your ducks in a row and just buy or make a gift versus buying a gift card or saying, "Charge It!" ?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.