Redeem Your Gift Cards Before They Become Worthless
by Erik Folgate
Filed under Consumer News, Spending and Saving
I’ve written in the past about using gift cards that you receive as soon as possible. Some companies put an expiration date on the gift card and some companies reduce the value of the gift card as each given increment of time passes such as three months, six months, or a year without using it. Now, we are finding out that your gift cards can become totally worthless if the company files for bankruptcy. According to bankruptcy laws, gift cards are treated as a loan to the company, rather than cash. Therefore, if a company files for chapter 11 bankruptcy, the bankruptcy court will suspend any use of gift cards to be redeemed at that company.
Sharper Image is a perfect example of this. Here is a statement from them that came straight from their website:
On Tuesday, February 19, 2008, The Sharper Image commenced a case under chapter 11 of the Bankruptcy Code in the United States Court for the District of Delaware. The company intends to continue to conduct business as usual while it devotes renewed efforts to resolve its operational and liquidity problems and develops a reorganization plan.
However, The Sharper Image is suspending the acceptance of Gift Cards, Reward Cards, Gift Certificates or Merchandise Certificates as a form of payment. We appreciate your understanding that according to Bankruptcy law, store employees, managers and the Company do not have the authority to override this directive. The Company is urgently working with the Bankruptcy Court to quickly come to a solution for this issue. Please check back with us in mid-March for further updates.
So, I’m sorry to report that if you carry an unused Sharper Image gift card that you received over the holidays, you can’t redeem it right now. Maybe it will be redeemable after the reorganization is completed, but they aren’t guaranteeing anything. I’m not sure how many people actually still shop at the Sharper Image. Everything in that store is grossly overpriced and much of their products aren’t practical. Fun to play with and test, but not something you truly must have. I suspect that is why they are filing for bankruptcy, because no one shops there anymore!
Don’t forget about the gift cards in your wallet. Billions of dollars are basically given to retailers each year, because people don’t redeem the gift cards. If it’s from a store that you don’t like, give it to someone else. I am sure you can find someone who would appreciate using it. You can either re-gift it to someone, or just give it away as a random act of kindness. But don’t just let it go to waste.
Great post. Thankfully, it is illegal for gift cards to expire in California. However, that doesn’t protect consumers from companies going bankrupt as in the Sharper Image case that you noted. It also doesn’t mean that all companies understand this California law.
I didn’t even know Sharper Image was still around. It is unfortunate that many will not be able to use their gift cards. I am a firm believer that when buying gift cards, go with a universal gift card like a Visa gift card. Check out http://www.giftcards.com for a nice way to personalize a gift card and the recipient won’t be out of luck because Visa and GiftCards.com are certainly not going to be filing for bankruptcy.
Mark, while VISA may not be going out of business there are plenty of people that allow these “loans to corporations” to be lose their value with time, or losing the card. There are services that buy back these cards!