Gift Cards: Buyer Beware

For convenient gift giving, it’s hard to beat a gift card. No worries about finding just the right gift, the right fit, or the right color. Some critics say, however, that gift cards are actually free money for the retail stores, since many of them are never used.

Other problems include expiration dates, fees that are charged if the card isn’t used within a certain time, and restrictions on what you can buy. Gift cards also aren’t regulated like credit or debit cards, so if there’s a problem with unauthorized purchases or billing errors, the recipient of the gift card is on the hook, not the issuer.

If those caveats don’t deter you from the convenience of gift carding, the dire situation that many retailers find themselves in may do it. Some well-known stores like Circuit City have declared bankruptcy and others, including Linens ‘N Things, have already gone under. Many others, including retail giants J.C. Penney and Macy’s, have announced that they are closing some stores. Retail experts predict that the fallout will accelerate after what forecasters believe will be a very gloomy holiday sales season, which could make some gift cards worth only pennies on the dollar or nothing at all.

If you still want the ease of giving a gift card, you might think about buying one from a mall. Many shopping malls sell cards that are good at any store in the mall, giving the recipient a wider range of choices and fewer worries that an individual store will go out of business. If you do buy a store card, buy it from a clerk, not from a rack, since scammers can easily get activation numbers from the cards on the racks. You should also know about any restrictions and terms before you buy.