There are times when a business may choose not to accept gift cards issued by a previous owner. However, more often than not, the new owner will need to honor your gift card. This is because more likely than not, they've purchases both the assets and the liabilities of the business.
As it relates to gift cards, we can simplify this to:
1. Gift cards = liabilities. The company owes a customer products or services for the money accepted in exchange for the gift card.
2. Assets = name, logo, location, customer data and so forth of the business. In most cases, the reason one would buy a business is it's proven track record of generating sales as a result of it's assets.
A case shown on the People's Court demonstrates some of the issues surrounding this matter. In short, the new business owner was unaware a $700 gift certificate was sold and refused to honor it for the full value. This case serves as a good reminder to several best practices for both consumers and business owners.
1. Always give the receipt with the gift card or gift certificate. It may be required for replacement or in this case, would have help prove the gift certificates legitimacy.
2. Paper only gift certificates/cards should be avoided if possible. They are often not accounted for properly, can easily be damaged and in this case may appear forged.
3. Redeem your gift card sooner than later. In this case, four years was enough time for problems to arise. Keep in mind federal gift card law now states gift card funds may not expire within five years.
For Business Owners:
1. Offer a lenient gift card acceptance policy. In the long run, you'll be better off and avoid negative word of mouth. Take the opportunity to gain, not loose a customer for life.
2. Account for gift card sales and redemptions. If you sell your business, it will be important information. Furthermore, you may need to report unredeemed gift card fund as unclaimed property depending on the state law(s) governing your business.
3. Offer a clear and concise Gift Card Terms for customers who own or are considering the purchase of a gift card. If the gift card does not expire or impose fees, use it as a selling point and convince customers you offer one of the best gift card programs available.
In the end, the judge is right in ruling the business owner must accept the gift card. This confusion is the result of missteps by all parties involved (including the previous owner). Here is the full episode (about 10 minutes):