Looks like there is a proposed bill SB885 in California which aims to raise the amount you can get cash back for on a gift card (close-loop only) from $10 to $20 and to do away with dormancy fees.
This story reminds us that it isn’t a good idea to purchase gift cards that are not packaged with the numbers clearly inaccessible where anyone can access them.
Our gift card resources page lists a couple of sites (Bidees, DFWbid) that have special types of auctions where you bid on items with specially purchased auction credits and any bids that are not winning are lost. From the get go I felt these were nothing more than scammy auctions that benefited the company much more than the customers, and the tech blog TechCrunch has an excellent post on a similar site BigDeal that shows just how stupid these type of auctions are. Think of them as a pyramid scheme – the winner of the auction probably gets a decent deal, but everyone else, the vast majority of people, get screwed.
Gift card issuers like to claim that gift cards are the most popular gift. Cashstar, a company that manages digital gift card networks for retailers, recently shared some trends that point out that gift cards may be popular, but they are most often the gift of LAST resort, not first choice. My interpretation – people often buy gift cards when they don’t have time to get another gift or just plain forgot to get a gift.
I’ve found this to be true with many problems. One couple was promised a gift card by ADT as a promotion for signing up for a security system, but despite months of waiting and many calls, it didn’t come. So they called their local news channels problem solver, they contacted ADT, and the gift card finally came. The unfortunate truth is that often it is only the threat of negative publicity that will get companies to do the right thing. (story)
According to this Sacramento Bee article, the author had a lot of trouble getting cash back for gift cards that were valued under $10, which is clearly spelled out under a California gift card law that has been in force for over two years now. This is similar to the problems with trying to use a low value Visa or MasterCard gift card at a point of sale via a split tender transaction, where you pay with two forms of payment, your low value gift card and something else. Open-loop card issuers claim that this is possible but in reality very few retail locations either allow this or have trained their clerks to be able to do this. Are you really going to take a retailer to task for not giving you back $5 when they should by law? I wish more people would, then perhaps retailers would properly educate their staff
According to this story, getting a general purpose (Visa/MasterCard) gift card from a bank is a royal pain in the butt. I understand that banks have financial reporting regulations but do they really need to make you jump through all the paperwork hoops for a $50 gift card when you can buy one at CVS or Safeway with zero documentation? My guess is that the share of gift cards sold directly from banks is a VERY small part of the market because of this.
GiftCards.com recently launched a new service where people can trade in their unwanted gift cards and pay bills (electric bill, cell phone bill, car payment) with the cash they get. The first question that comes to mind for me is, is this something people actually want? Why wouldn’t someone just get cash for their unwanted gift card on any number of the available sites that offer this service and use the cash for whatever they want?
I haven’t quite made up my mind about electronic gift cards (e-gift cards?). Electronic only gift cards like one we recently received for Barnes & Noble have been around for a while but have mostly been online only, but a new offering by CashStar, for stores such as Home Depot and CVS, allows for gift cards that can be printed out and taken to a store to use in person, as well as online. I like the idea of having an email trace of the gift card as it makes it less likely that I will lose it completely (such as I might lose an actual plastic gift card) but I am less likely to have a gift card with me when I visit a store if I have to print it out first.
It seems that banks aren’t the only ones out to screw customers with the small details. This news story reports that many stores will gladly cancel a lost gift card but they won’t replace a lost gift card without the original receipt. I have never heard of anyone saving a gift card receipt.
Amex seems determined to provide the best gift card product. One customer reports their gift cards being lost in the mail, so Amex simply invalidated the old cards and send him new ones. (story)
Does this lawsuit spell the end of the gift card party as retailers and card issuers know it? At issue is the remainder minutes on AT&T prepaid calling cards (breakage); there is often not enough left (pennies?) on a calling card to make an actual call, so the money is effectively lost. The lawsuit aims to repatriate that money into the State unclaimed property coffers, which, as anyone with a brain knows generally goes eventually into the State’s general fund, because unclaimed property of this type is VERY hard to return to the consumer.
What is interesting is that the State is going after a smaller breakage of this type. This could either happen because States are truly concerned about the consumer (not betting on it) or they are increasingly looking for additional cash to grab (most likely). In either case, combined with new State and Federal gift card laws, this could be the end of the party for gift card issuers.
Here is an excellent summary of state gift card laws by the National Conference of State Legislators.
A recent Ebay auction sold a $100 Visa gift card for $161.50. That makes no sense to me.
Right on the heels of Colorado’s announcement about pursuing gift card legislation next year, Wisconsin, which has no current gift card consumer protection laws, is discussing a gift card law outlawing service fees and expiration dates.
While the details of Colorado’s proposed gift card legislation (press release) have not been fully released, it sounds like is like a gift card law on steroids. It bans expiration dates and fees, including activation fees, monthly fees of any kind, fees for checking balances, etc. It also allows consumers to get cash back for balances less than $5.
What is unclear is whether it will apply to open-loop (Visa-type) gift cards and whether it will conflict in some ways with the Federal Reserves gift card rules.
What gift card has no fees, never expires, is always worth exactly what you paid for it, can be spent anywhere, and will never be subject to bankruptcy? Well, none. But I have an idea for a gift card that will satisfy all of that.
Basically, it would be a gift card with a hollowed out spot in the center where you can stuff some cash.
This article in the Chicago Tribune’s Consumer Help column tells us a couple of things anyone should know: First, contacting either a newspapers or TV stations consumer help guru is possibly the best way to get stubborn banks or other companies to change their minds and give you what they want. Almost every story I have read in one of these columns has resulted in the company reversing its previous position. Second, ridiculous policies still exist for gift cards, like in the reference article where a Visa gift card expires and loses ALL of its value in less than one year. Despite the best efforts of legislators, this behavior will continue, as trickery is the way many companies and most banks make their money these days. With gift cards, you must ALWAYS be on your toes, even after the new gift card laws take effect next year.
If this app from Wildcard Network works the way it claims, it may solve a problem I’ve always had with gift cards, not having them with me when I am at a store and want to use them. The app allows you to virtually store your gift cards in the iPhone so that you can use them at any time. You can even check balances right from the app. The app is free.
What is the downside? Very few supported cards right now. For instance, I have in my wallet two Barnes & Noble gift cards and a Home Depot gift cards. Neither of them is supported at this time. They also don’t support open-loop (Visa/MasterCard) gift cards (yet?). If they are able to widen their support to most gift cards, this could be a very cool app.
As this Forbes article indicates, fees on bank gift cards are far from dead. While this will change somewhat when the new gift card laws take effect in 2010, banks seem to be trying to wring as much out of their gift card customers as they can right now. Worst offender? Bank of America’s gift card doesn’t have any dormancy fees; the card simply becomes worthless after 9 months and can get you an overdraft fee.
Enjoy it while you can BofA.
RSS