Gift cards are suppose to be the gift that keeps on giving right? Maybe not this year!
The National Retail Federation says gift card sales are expected to drop 6 percent, as shoppers cut back on spending.
Even with that grim outlook, studies show consumers will buy an average of five gift cards and spend an average of $28 on each. That amounts to a whopping $25 billion in sales.
We have been hearing about an email that's going around about store closings. The email gives a list of stores that are all supposedly closing...and says if you have any gift cards to a store on the list, to use them immediately or they will be worthless.
We wanted to find out how much of the email is true, so we did some research to get the facts.
The email says the following stores will be closing:
- Cache
- Zales
- Piercing Pagoda
- Macy’s
- Pep Boys
- JC Penney
- Ethan Allen
However, we confirmed with each store individually, the information in the email is false and none of the stores are closing.
Now, if you have a gift card to a store that's filed for bankruptcy, unfortunately you don't have much recourse.
Under federal law, if a business files chapter 11 bankruptcy, they do have the right to stop honoring gift cards. If the store wants to continue accepting gift cards, it's up to the retailer to ask a bankruptcy court to allow it. If the court denies it, there's not much you can do.
The courts did approve stores like Circuit City, Sharper Image and Linens 'N Things, who have all filed for bankruptcy, to continue honoring gift cards! So that's a good sign.
So how do you protect yourself?
As soon as you hear the retailer has filed for bankruptcy, call and ask if they will continue to accept gift cards. If they say yes, your best bet is to use the card immediately!
Another option is to file a claim against the assets of the company in bankruptcy court. However, experts say, since gift card holders are unsecured creditors, your chances of getting all your money back are slim.
Even consumer advocates are saying, this year it might be better to give cash instead of a gift card. If you have to give a gift card, choose cards offered by major credit card issuers like American Express, Master Card, Discover and Visa.
But remember, most comes with fee's and restrictions. So do your homework before you sign on the dotted line.
