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WA Bans Gift-Card Expirations, Fees
theodp writes "The Seattle Times reports on new legislation that makes WA one of 15-20 states that have passed or are in the process of adopting laws that ban expiration dates on gift certificates, which enjoyed sales of $40+ billion last year. The consumer protection law is also expected to address the cat-and-mouse games retailers play of shopping for states with unclaimed-property laws that allow them to pocket unused gift-card value. As it so happens, Delaware state law requires a company to send unclaimed gift certificate monies to the state, while Idaho allows a company to keep the cash for itself. While an Amazon.com spokeswoman said the company would adhere to the new WA law for WA residents, she declined to say why the Seattle-headquartered and Delaware-incorporated Amazon established an Idaho company two years ago called A2Z to handle its gift-card operations."
If expiration dates on gift certificates are banned, how do they determine when a gift certificate is 'unclaimed'?
I'll elaborate:
1. First of all at the initial purchasing of this piece of plastic/paper, the retailer gets straight up cash with no physical loss of goods until possibly months later. In that time the money could be used for all sorts of useful things.
2. People who receive gift certificates feel obligated to use them to their full amount, otherwise they will lose the value of the card. The only problem is few things are exactly worth $20, so the consumer is forced to either pay up their own money for something, or buy something for less than the value of the card.
3. Gift certificates can't be banked or deposited, they can only be storted in some physical location, making them far easier to lose than money.
Don't get me wrong, I don't mind buying or receiving gift certificates. They have saved me tons of time buying gifts. But I think it's clear retailers are getting quite a deal out of it.
Corporations: your universal scapegoat for all society's ills.
On the otherhand who should get the money. Why is the state the benificiary? Another way of giving it back is to award it to like minded customers. That is give it to the company. Their lower operating costs effectively will be returned to either the customers who shop there or to the investors who think investing in these kinds of comapnies is good. Eitherway like minded consumers benefit from lower costs.
I'd say givign it back to the company makes a lot of sense. Giving it to the state then next best thing. Sunsetting them is critical.
Some drink at the fountain of knowledge. Others just gargle.
It should be of no surprise, especially to investors, that a company like amazon would use the law to their advantage and open A2Z where they did. Bezos (and his cohorts) have made amazon one of the most popular online shopping sites in the world with alliances including cdnow, toys r us, office depot, circuit city, and others. Their stock has been doing very well for a while now.
Lets not forget the best part of online gift certs.. you can buy them the same day you need them, from your work, because you forgot about your 's birthday/anniversery, etc.
There are a couple of reasons gift certificates are popular.
Firstly, giving a GC shows that you actually went out to the store and shopped for them. Many people equate cash presents with "Oh, so you forgot it was my birthday until the last minute?"
Secondly, a GC can force the recipient to make a certain type of purchase. Cash gifts often wind up being spent on groceries, or rent, or gasoline. If you give someone a Best Buy GC, you can be fairly certain they'll buy a fun luxury item, rather then some mundane everyday necessity.
2. People who receive gift certificates feel obligated to use them to their full amount, otherwise they will lose the value of the card. The only problem is few things are exactly worth $20, so the consumer is forced to either pay up their own money for something, or buy something for less than the value of the card.
This is probably the biggest benefit to the retailers. I myself just received a 300-yen gift certificate from amazon.co.jp good for three months or so, and while I know enough about the system not to run out and spend it (plus my own money) on some random thing, I have to admit the temptation is there to find something I'd want anyway and get it before the gift certificate expires.
If Japan had a law preventing expiration, that psychological pressure would definitely be lessened.
That's not shady. They're not even working around a law, they're doing something that's expressly legal.
Personally, I don't see the point for these laws. I live in a state that either has a no-expiration law or extends the expiration to something ridiculous like 7 years (I can't remember which), but I can't remember the last time I kept a gift card for more than a month or two. Are people really burying these things? A year is still a lot more generous than the 60- or 90-day expiration on a personal check (not a comparable analogy, I know).
Interested in open source engine management for your Subaru?
right. they're not working around the laws of the other 49 states to benefit themselves, they just happened to pick an "idaho" tag out of a hat.
let me guess... you're a republican?
Why do we need goverment to get involved on the expiration date for gift certificates? If some store sells gift certificates that expire within a month we have the option of not buying it! I know that is a novel concept for some people, but no one is obligated to purchase gift certs at any given store.
I could understand if tehy paased a law to ensure the the expiration date was clearly displayed, but this is a waste of their time and it will probably not be enforced anyway.
This account has been seized by the GNAA. That is all.
Otherwise the company slowly accululates huge on-book liabilities
But only after slowly accumulating a huge on-book asset of all that cash they've taken in. Put that money in the bank and never touch it until a gift certificate comes back in, then you'll always have the cash to offset that liability--plus the interest for free.
A gift certificate is like an anonymous savings account that bears no interest and can only be used at one company.
Contribute to civilization: ari.aynrand.org/donate
...all the thought of cash, just not as good.
Seriously, why do people give these things? **NOBODY** wouldn't rather have cash. I suppose people think that it proves that they put some kind of thought into it, but they're wrong. "Oh, he's a techie person, give him a CompUSA gift card." Gee, thanks. If I had cash instead I could get the tech stuff I *want* instead of what CompUSA happens to have. Or maybe my car is broken this week, but it's hard to get the mechanic to take a $100 CompUSA card in payment.
I think this is a great move by the state for consumer protection. I only wish the federal government would pass similar legislation.
I recently purchased a Jamba Juice card because they were offering a free drink with the purchase of a $25 card, and I figured that since I was going to spend that much eventually anyway, I might as well get a free drink out of it.
I noticed on the back that if you don't use your card for 12 months, they start deducting $2 a month for every subsequent month you don't use it as a "maintenance fee". While I applaud them for putting this on the card itself, I still think it's wrong. You've basically given them cash; they have no right to start taking it from you just because you haven't asked for any back in a while. The interest they're making on the amount I "deposited" should be more than enough. (And before anyone points out that $25 is not much interest, think about 4,000 people buying cards... all of a sudden, interest on $100,000 doesn't seem so small anymore does it?)
I browse Slashdot at +3, Funny
How those numbers sit on a spreadsheet can determine how much tax you owe.
Computers, for example, can't (normally) be expensed, they have to be depreciated.
Sell them to another department for a dollar, and you can realize the loss immediately.
This insanity brought to you by the IRS.
I'm just as against big companies screwing people as anyone else, but I don't really see the point of laws like this. If a company wants to say that gift cards expire after a year (or a month, or 10 years), what's the problem? So long as the customer knows about it when they purchase the gift card, it's just a mutually voluntary transaction between two consenting parties. I could understand a law requiring companies to explicitly warn customers about expiration dates when they buy the card, but it seems silly to say that a company shouldn't be able to impose restrictions on a gift card even if the customer agrees to it.
Also, keep in mind that a certain percentage of gift cards are sure to be lost or never used for some other reason. If they never expire, the company is basically accumulating an ever-growing debt that will probably never be called, but in theory could be at any time.
I sometimes prefer gift cards to cash, and some gift cards are worth at least as much as cash to me. Let's say that I am going to purchase $20 of camping equipment I want but don't really need, whether or not I have a gift card. If I purchase it using a gift card I received, I don't feel guilty about not spending my money more wisely, since I couldn't spend that money on anything else. So, in that sense a gift card could be more valuable to me, if it allows me to purchase something guilt free.
Similarly, while I am not married, assume that a husband receives either a $100 gift card to Best Buy or $100 cash, and that his wife has been getting tired of his spending all their money on tech toys. If he received the cash, he will be asking for trouble if he runs out to Best Buy, but with the gift certificate his wife will have no complaint. Therefore, the gift certificate might be more valuable to the husband.
They really should have put this energy into legislating against the real scam currently being run by retailers and manufacturers, namely, rebates.
I agree. Some retailers want a bit of everything including the UPC, box top, original sales reciept, etc. to make sure rebate breakage is high. They also list prices on the shelf in big print as after rebate, not the price you have to pay now which is in very fine print. (Best Buy) A couple times I put stuff back on the shelf as I was mis-lead to the price of some items and added the prices in my head, only to not have enough money at checkout to buy them. OOPS! How many people put stuff on a card and not notice the total is $20-40 than the big prices on the shelf indicated?
Other retailers do a much better job and provide the extra copy to mail and if you wish you could file online for the rebate instead of sending anything (good job Costco!). I bought some items from Costco that I didn't know had a rebate, but the paperwork generated at the register let me know about the rebate. The big price in the shelf is the price to pay and the amount of the rebate, not just the price after the rebate in bit print. I've never had an issue of late or missing rebates from Costco unlike some other retailers. You did remember to include the UPC and proof of purchase token didn't you?
The truth shall set you free!
Its a gift card, not cash. If you want the flexibility of cash, then GET CASH. If you didn't like the terms/conditions of the card, then you didn't have to take it.
Much easier, though it will cost you extra $5 or so. But then the recepient gets to shop at ANY store. Or that $20 can be spent at the gas station (just go inside and ask for $20 worth of gas, the pump will shut off automatically once it reaches the limit ;) )
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