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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'?
If a company has a "gift certificate" they have a contract with the buyer to provide the benefit to the buyer's designee. If nobody claims the money under the controlling state law (we might want to designate a state for the purposes of the contract) then the money is abandoned property and escheats to the state. Anything else is a windfall for the company - and remember, absent the structure of laws the company could not exist. Pay the piper and lower the tax burden.
Besides, the company will have a major incentive to find the designee so that they can make their ordinary profit - rather than lose everything. Consumers benefit all around!
Belive me if you want, but I'm a former Amazon.com retail customer service monkey, and I was employed when the the A2Z shell company was created. We we're essentially told that Idaho was the home of the new company for the express purpose of being able to keep expired GC's. This move coresponded very close in time to a change in policy to never extend the life of a GC past it's original date. Previously, all GC's were 1 year, but we would renew them over and over again so long as you called/emailed and asked. When I left, it was changed to 2 years, but under no circumstances could the date be moved back.
When we all asked about just how shady this move (and dozens of other matters you don't want to know about) was, it was always sold to us as "It will help us profit, which will make your stock go up."
However, we were not to mention these reasons to customers, but rather to fill them with some BS about having the freedom to serve them better or something like that. This resulted in the day I got in trouble for "telling the truth to a customer." Seems they didn't appreciate me explaining to a customer why Idaho is a great place to start a shell GC company.
I think everyone should work for Amazon.com for at least a couple months. You will forever appreciate whatever other job you're at, plus you will have hundreds of hilarious stories to tell.
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.
I received a $50 Best Buy gift certificate for Christmas but I cannot find it anywhere!
At least now I know that I have a lifetime to search for it.
There are other ways of getting to the money. Simon Properties, a popular Mall management / owner company, offers gift cards. For each month of inactivity, they charge a fee ... something like $1.25 or so, around what an ATM fee might be. So if you get a $40 gift card, use $30 of it and leave it for 5 months, you've got a $0 balance.
Starbucks is or was doing something similar if I recall correctly.
They'll get you one way or another.
AC
I've more than once managed to use an expired gift voucher, with some gentle persuasion.
I guess it boils down to the store and how rigid they are with their policies, but if they reject it, then they run the risk of you shopping elsewhere.
"Gift Cards" offered by retailers are one of those phenomena in which it pays to read the fine print. Some people would assume, incorrectly, that there is some kind of "set standard" for gift card practices, when, in fact, you don't really know what you are "buying". I worked for a retailer that, on occasion gave away "$25 coupons" (not gift card/certificates) with every "$50 purchase", but, due to fine print in the company's "gift card" policy, the shopper could not apply "gift card purchases" toward that offer. The way the fine print stated it, the "purchase" of a gift card is not a "purchase" at all, as the actual "purchase" occours when the gift card is redeemed.
I always thought this was a little shady, as the customer is actually handing over their money (ie: purchasing) when they buy the gift card, but my company's legal team didn't see it that way, insisting that "gift cards" did not constitute a "product" being purchased, it was simply money exchanged between "accounts".
I'm not entirely sure we need a law to govern this. If someone is naive enough to take money that is good everywhere and make it good only in one place and expire after a while, then so be it I say.
I wonder why it's acceptable to send someone an Amazon gift card as a present, but it's not acceptable to send them $20 cash, which would be more generally useful.
Maybe it's because then we would realize that the cash exchange cancels out to zero. If we convert the cash to a non-interchangeable form of private money, it makes it seem like the whole exercise has some kind of point.
I guess it's yet another example of an opportunity for smart proprietors to profit off of a common logic flaw in the human brain.
...this was a statistic quoted to me by a guy who sold these for a living. I sat next to him on a plane back in January.
He sold gift cards to smaller companies, mom and pop stores (not Best Buy or Amazon type juggernauts), and used the main selling points that it was often instant revenue, and the 12% that was never used became pure profit for the company.
He also said that these things sold themselves. I guess he never tried to sell them in Delaware.
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.
they could get rid of that pesky, so much per month charge for unused card, thing like they have on the starbucks card...
Starbucks makes it out like it is costing them a fortune to keep a database file of how much you have on their card.
I will explain, too long, I will sum up, You get a card at $B, put money on it, if you don't use it for a certain period, they wipe it clean and you are done, or if you neglect to use it for a period they charge you for not using it...
sound fair to you, or should I say, sound fare?
Don't know about you but it leaves me with a bad taste of burnt coffee in my mouth, of course this just might be the $B coffee I had this morning.
flinging poop since 1969
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 $20, so the consumer is forced to either pay up their own money for something, or buy something for less than the value of the card.
This is probably the biggest benefit to the retailers. I myself just received a 300-yen gift certificate from amazon.co.jp good for three months or so, and while I know enough about the system not to run out and spend it (plus my own money) on some random thing, I have to admit the temptation is there to find something I'd want anyway and get it before the gift certificate expires.
If Japan had a law preventing expiration, that psychological pressure would definitely be lessened.
I have never understood gift cards or gift certificates. If I don't know what to get a person I do the best thing possible, get them a nice card they will like, a book, and 20$. Then the recpiaint gets what he/she wants and I get the satisfaction of knowing I didn't just give them 20$ at the last minute. Gift cards give money to a store you may or may not shop at for no real benefit to the recipiant. Last Christmas I received 2 25$ gift cards to chain resturants form family. Unfortunately I live in rural Georgia and it is a 30 minutes drive to the nearest McDonalds and an hour plus drive to a Buffaloes, Moe's, Joe's crab shack, Roadhouse Grill, etc.
SO would someone here please explain why people buy gift cards instead of cheap gift + cash? (Which is all giftcards are in my eyes)
There is nothing wrong with being gay. It's getting caught where the trouble lies.
I actually like getting gift cards. With cash, I'll probably spend it on stupid things like deciding to eat out.
Conversely, a gift card narrows it down to where I have to spend it. I can usually find things that I want at that store anyway.
For example, I'm not a huge movie fan, so I wouldn't normally spend my money on a DVD. If I have a Best Buy gift card for $20, I don't have much choice. It's a nice excuse for buying unnecessary items.
.. Should be changed to Canadian Tire money, its so simple and they give you some back every time you make a purchace its the burden, erm, gift that keeps on giving.
Dear aunt, let's set so double the killer delete select all
Because it's a scam.
And a lot of retailers are not only now expiring gift certificates, but they're also claiming a "storage fee" after a few months for maintaning the account in their records.
Why not just give them cash? Some teens and tweens aren't very wise with their choices, and I prefer to let their parents worry about their spending. For example: one Christmas my grandparents gave both my brother and myself decent checks. Mine went into a bank account where I slowly depleted it over the course of several months for textbooks and entertainment in college. My younger high-school age brother immediately spent the entire thing on fake Asian-looking swords from a hobby store. My parents had to ban all relatives from giving him cash for a few years because they were so horrified by how he blew a huge chunk of money. Gift certificates would have avoided that problem.
Adults are a different issue. My grandmother likes to write me checks but tell me what I'm supposed to spend it on (e.g., furniture). That's sort of like a gift certificate in the sense of indicating where the money should be spent, but I can choose which furniture store to visit. And I still often give my brother gift certificates because the sword incident sticks in my mind. *grin*
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.
Stores need to have a finite life to gift cards. Their accountants need to know what's in stock, what's capital and what's currently able to be claimed. How long can a store sit on capital in the name of unclaimed gift cards?
They need to keep the cash flow going in the name of a good economy. Why should they be force to forever ponder the future fate of capital based on 25 year old gift cards?
And for all of you out there questioning the rights and wrongs of cash vs. gift card... Go ask Martha Stewart... This is Slashdot, not Queer Eye for the Straight Guy; Christmas Edition. Now off with ya!
Dedicated Cthulhu Cultist since 4523 BC.
...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
Here's the deal:
Gift CERTIFICATES and gift CARDS are actually two seperate products, covered under different laws.
A gift CERTIFICATE will have an expiration date normally of 3-6 months from date of issuance. When a company sells a CERTIFICATE, they book the sale immediatly, and then book a loss when the certificate is redeemed.
A gift CARD, however, is a pre-paid credit card. Like a normal credit card, it has an expiration date that is usually astronomically longer than a CERTIFICATE.. if -ever-. And a company does not book a SALE on the card until the card is actually USED. A company that I used to work for issues gift cards with NO expiration date - however, on the back of the gift card, it does state that if the card is not used at any point during a consecutive three-year period, $1.00 will be taken from the card (and they get to write that up as a sale, in the company) for every successive year after that three year period, until the card is used by a customer (then it starts it's three years over again), or the value of the card is depleted (by either use, or charging $1.00 to it every year for virtually damn forever).
In this company's case, it's about booking it. If the card is ever lost, and never recovered, it will eventually expire, and generate future sales at the rate of $1 per year. Yes, in the case of a $400 gift card, that could take a bare minimum of 403 years from date of issuance.
"Champagne for my real friends - and real pain for my sham friends!" http://ericblade.postalboard.com/
In Michigan, gift certificates are supposed to last five years. After five years, if it is worth more than $50, then the state is supposed to get the money. Any individual who can prove the money is theirs can get the money from the state. If it's less than $50, then the business can just keep it after five years.
However, apparently no one follows this law. I see plenty of businesses that attempt to limit their gift certificates, some even for only 6 months.
I wonder if Washington will have any more luck than Michigan in enforcing their law.
If someone says he and his monkey have nothing to hide, they almost certainly do.
M&S = Marks & Spencers, high street department store type place for those not in the UK.
They don't expire.
3 years ago, my mother spent the M&S gift vouchers that they had recieved at their wedding 22 years after having been given them..
No doubt the person behind the counter was shocked to be given a gift voucher older than they were, but it was still valid.
However, it hadn't survived inflation very well, 2 1 vouchers were still worth 2. Unfortunately, 2 is not worth nearly as much as what it was worth when the vouchers were given.
M&S took a decent value of cash for these bits of paper & redeemed them 22 years later (after having had the cash to invest for 22 years) for something worth much less.
Which is why I hate getting gift vouchers - I've never had one for over 22 years, but if I did it would depreciate in real value... and I'd be locked into spending it at a specific place.
FGD 135
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!
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 ;) )
Hyperom.com
Doesn't the government issue its own Gift certificates, usable at any store nationwide, available in convenient amounts ($1 $5 $10 $20 $50 $100). For those interested in history, they have pictures of past presidents and founding fathers on one side.
These do not have any expiration date, and do not have any fees attached (but of course they are affected by inflation.)
Why not use these when its gift giving time?
My mother dislikes gift cards and gift certificates because if the store goes out of business, you lose that money. Would we now get to stand in line before they declare bankruptcy and try to get our money back?
If you're worried about store closings, expiration dates, etc. just send plain old cash as a gift. Cash is good anywhere for anything, doesn't lose value more than "normal" and doesn't expire.
--The Programming goddess from Gorflaz
For two years the company has free use of the gift card money to obtain free interest. Sure there is some maintenance cost, but not much. After that time the money is unused and really does not belong to the company. For the benefit of all people, the money could best be used as other taxes to the state or federal government, although I don't think the federal gov is allowed to collect those kinds of revenue as tax. Perhaps the card agreement should have an opt-in/out clause of whether they want the expired card money to go to the corporation or the state.
Whether you call it a gift card, gift certificate, or whatever, I cannot emphasize enough the need to choose your merchant carefully and read the fine print! I know in our area, restaurants come and go with great regularity. While a restaurant gift certificate can be a wonderful gift, there is some risk in holding on to it. My wife works for LL Bean and I think their approach to gift certificates is consumer friendly. They record who purchases the gift certificate at the time of sale. You can spend the certificates you bought at any time and in any way (e.g. web site, store, phone). You don't even have to have the original certificate in hand; they keep an online record of it. The only problem we've run into is when you give one as a gift, LL Bean's record still shows it as yours so it's possible for you to spend one you've given away! Still, all-in-all, it works very nicely. Of course, if they go bankrupt, we're going to be out some dough!
I was at a Safeway grocery store recently where they sell lots of cards for other stores such as BN, and the teller let us know that as of January 1 the oh-so-helpful government had killed the law that provided similar protection to California residents. All gift cards/certs sold before 1/1/04 were valid forever, but after that date they expired as listed on the card.
It's a pity our legislators are watching out so carefully for the consumer's rights...
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