If the gift receiver never redeems the card, then it is like stuffing cash under your mattress. The store loses nothing, the gift purchaser still has the satisfaction of giving a gift, and the gift receiver can still redeem the card until the store either goes out of business, ends the gift card program, or upgrades their system to the point where the cards are no longer readable by their technology.
The only real cost to the store is the materials cost of the gift card, and whatever wear and tear there is for encoding the card with value. I would consider that an SG&A expense, the cost of doing business.
-PJ
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.