Gift Card Blog - ScripSmart

Maine Improves Gift Card Laws Related To Unclaimed Property

Late last month, Maine legislators passed LD 247 (HP 200). The bill amends Maine Gift Card Law as it relates to unclaimed property. In short, gift cards will still be considered unclaimed property by the State of Maine; however, the date of abandonment has been pushed from 2 years to 5 years of inactivity. Also, a sentence which allowed the gift card issuer to keep 40% of the face value of the gift card when turning the money over to the state was removed.

To sum it up, the full face value of gift cards must be turned over after 5 years of inactivity and according to Maine's Office of Legislative Information, the effective date of these changes is September 28, 2011.

A Step In The Right Direction

Cheers to this Bill's sponsor, Representative Kerri Prescott of Topsham, Maine. This is definitely a step in the right direction. At least gift cards will not be considered abandoned before they can legal expire under Federal Gift Card Law (5 years).

Also, the notion of splitting up the pot between the state and the gift card issuers makes no sense to me; it's good to see this line stricken from the books.

Still Not Enough

I've written several times about why gift card should not be considered unclaimed property. My reasoning has little to do with who should be allowed to benefit from the value of unused gift card and more to do with whether or not a state can be sure they have the right to such property.

Simply put, the location of the gift cardholder is often unknown. Typically a person who purchased the gift card is not the same as the person who actually owns the gift card. That's because most of us buy and give gift cards as gifts. As such, I don't see how a state can be certain they have the right to property. After all, some of the gift cards a state lays claim to will certainly be held by a person residing in another state.

Furthermore, a state who deems gift cards to be unclaimed property is essentially forcing an expiration date. After the value of the gift card is turned over to the state, the merchant no longer has an obligation to honor the gift card. In order to recoup the money, consumers must go to the state treasurer and search for the unclaimed property. Naturally, most consumers never get the cash from the state and it's the state's budget who actually benefits from classifying gift cards as unclaimed property, not the holder of the property.

A Word Of Advice

One of the easiest ways to be a smart gift card consumer is to use them ASAP. Naturally, that's easier said than done. I certainly have had my moments of letting gift cards sit in my wallet. If you're like me, take a look a ScripSmart's gift card alert system. Just sign up for a free account, register the gift cards you own and we'll send you helpful reminders to ensure you're getting the most out of the gift cards. It's really easy.

Borders To Close All Locations: Gift Cards Will Soon Be Worthless

In February 2011, I wrote about Borders filing for Chapter 11 bankruptcy protection and urged consumers to redeem their gift cards before it was too late. We've also listed the Borders Gift Card on our list of gift cards to avoid for quite some time as a warning consumers should not buy the Borders Gift Card.

The Doors Are Closing, Gift Cards Will Be Worthless

Late Monday, Borders Group, Inc. announced the doors will be closing for good. The company was unable to find a buyer and liquidation will begin as soon as this Friday, July 22, 2011. According to the company's press release, the liquidation process is expected to conclude in the month of September. 

For anyone still holding a Borders Gift Card: go out there and redeem it now because it will soon be a worthless! It's not safe to assume gift cards will continue to be accepted through the entire liquidation process.

Unfortunately, the company's press release gives no information for gift cardholders. We've sent a note into Borders asking for more details on their plans for honoring gift cards.

As I'm writing this, Borders is still selling gift card via it's website. Let's hope they cancel any orders placed after this announcement.

Update: Borders got back to me with the following:

"...gift cards are being accepted through the liquidation sales. Sales are expected to begin as early as this Friday in some stores.Stores are expected to close by the end of September."

Also, gift cards are currently no longer being sold on borders.com.

A Not So Distant History Lesson: Hollywood Video

Not long ago, Hollywood Video (Movie Gallery) closed it's doors for good. They liquidated all assets and offered consumers the ability to redeem gift cards as long as the doors were open. Unfortunately, locations closed pretty fast and there was not much communication as to when each location would close.

My understanding is the doors for each location remained open as long as there was merchandise to be sold. In the end, the company's gift cards are now worthless and we moved it to the gift card graveyard. The Borders Gift Card will be in buried there, too.

ScripSmart Accounts Can Help

Remember, ScripSmart offers a free account system for helping consumers avoid getting stuck with a worthless gift card. We've already sent out messages to those who have registered ownership of the Borders Gift Card in their ScripSmart Account. If you'd like a little extra help on this front, just sign up here and add the gift cards you own. Also, we send other helpful email alerts to ensure you're getting the most of your gift cards.

Gift Card Cash Back Advice - 5 Tips For Getting Your Money

Recently, I received a note from a Washington consumer named Van. In short, Van was looking for a little help in getting cash back for his Olive Garden Gift Card.

He writes:

"I called Red Lobster in Vancouver, WA and was told that the restaurant’s policy is to never refund cash remaining on a gift card, even if only a few dollars. This seems to be in opposition to state law."

Note: Darden Restaurants, Inc. owns Red Lobster and the Olive Garden; the gift cards can be used at any Darden owned location.

Van is correct, Washington Gift Card Law clearly states a consumer can receive cash back for their gift card if the balance is less than $5.00 and the gift card has been used at least once. Keep in mind, Washington excludes some types of gift cards from it's law; namely bank-issued gift cards, gift cards donated to a charity and free loyalty/promotional cards. In other words, there is a chance he may not have been entitled to cash back it the card was given away for free as a promotion or fundraiser.

5 Tips To Get Your Cash

If you come across a merchant who is unwilling to provide cash back for your gift card when the law provides you the option, Here are five steps to take:

1. Find out if they are unaware of the law or if there is another reason why they are refusing to give you cash back.
2. Print out the portion of the section code which state's you are entitled to a cash refund.
3. Ask to speak to a manager and be polite to all the employees during the process.
4. Contact the company's corporate headquarters to report the violation and request resolution.
5. File a complaint with your state's attorney general if #1-4 yield no results.

Here is what Van did:

"I decided to call their Guest Relations’ 800 number. A person named Justin said he would contact their legal department to review the law and, if true, to contact its Washington restaurants so that the personnel will be better educated about the laws governing cash back if less than $5. With your help, I was able to give him the number of the law referenced."

And shortly, Van received a response from guest relations:

"We do apologize that our employees was not well informed about your ability to cash out gift cards with balances of $5 or less in the State of Washington. Please be assured that we did some training in this area with our Vancouver, WA team. You should have no issue doing this on your visit."

So, in the end, the Red Lobster location was unfamiliar with Washington's gift card laws. I can assure you this will not be the last time a company/location will be unfamiliar with state gift card laws. 

It's great to see Darden Restaurants take the appropriate actions: training the staff and getting Van some cash. Cheers to Van for taking the time to go about this the right way and helping Darden identify an area of imporvement; I think Darden owes Van a meal! :)

Gift Card Laws & Groupon's New Terms

Earlier this year, I wrote about Groupon and gift card laws.

Since writing the article, Groupon has changed it's Terms to take more responsibility for the Vouchers it issues on behalf of merchants. Now they specifically state,the "paid for" portion of the Groupon Voucher does not expire.

The old Groupon Terms of Use stated:

"...applicable law may provide that the Merchant is responsible for honoring the cash value that you paid for your Voucher for a period of time beyond the expiration date stated on the Voucher."

The current Terms of Use states:

    "The purchase value does not expire until it is used or refunded...The promotional value will expire by the date stated on the face of the GROUPON unless applicable law prohibits the promotional value from expiring."

A Good Move By Groupon

In my February post, I brought up the notion of gift card cash back laws and why it's obvious state legislators did not intend to include "promotional portions" of gift cards under the law.

Here's a short recap:

If a consumer paid $5 for $10 worth of services, they might be able to use just $5.01 worth of services and demand a cash refund for the $4.99. This implies a consumer would pay just one penny for $5.01 worth of services. That just down't seem right.

At the same time, it's likely state legislators will see the "paid for" portion of a Groupon Voucher as a something very similar to a gift card. Gift card laws are implimneted to protect consumers from having money drained from thier pocket, not to protect promtional value in the fourm of a coupon.

Why It's Not Enough

From the looks of it, Groupon is currently disclosing the promotional value's expiration date, not the paid for value on the actual Voucher. Here is a Groupon from today:

This could easily be seen as a deceptive business practice. After all, most consumers who own such an offer would conclude the value of the Groupon is worthless after the expiration date. In fact, earlier this year, Amway settled gift card lawsuit which has some striking similarities to Groupon's current business practice of placing just one expiration date on each Voucher.

Groupon should specifically include expiration detail for both portions of each Groupon directly on the Voucher.

Clarification Is Needed

Daily deal sites are under a slew of attacks form consumer advocates and lawyers. Just today I learned Connecticut's Attorney General is looking into whether or not Groupon's fall under Connecticut Gift Card Law. I look forward to the day when this is all cleared up. It will be benifical to both consumers and the companies who issue daily deals with the hope of growing their business.

Utah Gift Card Law Changed - No Longer Unclaimed Property

As of July 1st, 2011, gift cards are no longer considered unclaimed property by the state of Utah. This change was a result of Senate Bill 270 and was actually passed into law on March 25, 2009.  Utah Senator Wayne Niederhauser and House Representative Rebecca Lockhart sponsored S.B. 270. Cheers to them for helping modernize Utah's Gift Card Laws.

Why This Is A Good Thing

Considering gift cards as unclaimed property is a bad idea and it's great to see Utah confirming such a belief. There is one predominant factor to consider when deciding whether or not a gift card should be considered unclaimed property: true ownership of the property.

The fact is, the true owner of a gift card is typically unknown by the company who sold the gift card and the state were the gift card was issued. That's problematic because a state's right to seize unclaimed property often requires the property to be within the state's borders in some way.

The true owner of the gift card is typically an unknown because most consumers buy gift cards to give as a gift to another person. Such a person might live in another state or they could move to another state before redeeming their gift card. The bottom line is there is not a simple, effective and accurate way to determine where the person who owns the gift card actually lives.

Using A Butcher's Knife Instead Of A Surgeon's Scalpel

Unfortunately, states which still consider gift cards as unclaimed property often use rather crude ways for determining which gift cards should be turned over as unclaimed property. For example, Nevada Gift Card Law states:

"If a gift certificate is issued or sold in this State and the seller or issuer does not obtain and maintain in his or her records the name and address of the owner of the gift certificate, the address of the owner of the gift certificate shall be deemed to be the address of the Office of the State Treasurer in Carson City."

First off, it's not very reasonable to expect a merchant to know who the gift card was given to at all times. I understand there are merchants who offer the ability to register gift cards, but the vast majority of gift cards are single use and never registered by it's rightful owner.

Second, the net effect of this law results in most gift cards sold in Nevada being deemed to be held by the State Treasurer in Carson City. It's obvious no gift cards will actually be owned by a person at that address and I can tell you first hand I've sent gift cards out of the state which it was originally purchased. This is the butcher's knife, but they need a scalpel if they want to accurately seize unclaimed property.

In The End, It's The State's Budget Who Benefits

One could argue a consumer could search unclaimed property and get the a check for the gift card's value which was turned over to the state; however, the reality is most consumers are unlikely to search for the property and it's even possible a state which they do not live in currently holds the property.

State legislators who want to consider gift cards as unclaimed property are focused more on gaining "free money" for their budget and less on protecting consumers and making the gift card industry more consumer friendly.

It's time to see more state's follow the path of Utah. The simple and fair thing to do here is exclude gift cards from unclaimed property laws.

The 1.1 Million Dollar Gift Card Ponzi Scheme

You read the title correctly. A Columbia, South Carolina woman has plead guilty to a "gift card ponzi scheme" which defrauded her victims out of $1.1 million.

Annette Marie Benson was in the business of selling discounted gift cards. The gift cards were real and discounts ranged from 20-50% off the face value; demand for her product was high.

Apparently, Benson would pay face value for the gift cards, sell them at a discount and then cover the losses with incoming money from new customers/victims. Naturally, there must have been a time-laps between when Benson collect money for the discounted gift card to when she actually bought the gift card at the full value.

Eventually, Benson could not cover the losses and the ponzi scheme collapsed. She faces up to 20 years in prison.

Tip: Only Buy Discounted Gift Cards From a Reputable Company

ScripSmart recommends staying away from buying gift cards directly from an individual seller. Especially given the fact there are several companies in the secondary gift card market who offer a solid track record, free shipping and transaction guarantees. The same can't be said for Benson's business or any other individual sellers.

In fact, ScripSmart checks the inventory several times each day of two such companies: Cardpool and Plastic Jungle. We then display the results next to each gift card review. For example, if you're looking at the Home Depot Gift Card review on ScripSmart, you'll see Plastic Jungle is offering 6% discount and Cardpool is offering a 8% discount. Just look for a 'Gift Card Deals' section on the left hand side.

We like Cardpool and Plastic Jungle because they offer free shipping, transaction guarantees and have a solid track record of delivering on their promises. Remember, whether buying directly from the merchant or for the secondary market, check the Gift Card Score before making your next gift card purchase to ensure you're getting a quality product.

First Data Gift Card Study - 4 Interesting Points

In March 2011, First Data published their 2010 Consumer Insights Gift Card Survey Results. If you're involved in the gift card industry, this is a great study and a worthwhile read.

Below are four points I found interesting:

1. Gift Card Design Is Not A Huge Selling Point

This seems to counter the trend of merchant's offering several gift card designs to consumers. In fact, only 1/10 consumers said they would not buy the gift card if they did not like the design.

2. "Gift Card Malls" Gain In Popularity

While this was not a surprise, the rate at which gift card malls are increasing in popularity (while eating away at the merchant's direct sales channel) was more surprising to me. If the trends continue, gift card malls will be the preferred method for purchasing gift cards.

 

3. Number Of Gift Cards Received Increased

On average, consumers received 3.4 gift cards in 2010. That's up from 2009's number of 2.9 gift cards received. I expect this trend to continue given the fact merchants are utilizing gift cards to pay consumers for goods.

4. Consumers Tend To Redeem Their Gift Cards Within 6 Months

Using a gift card sooner than later is one of the simplest things consumers can do to be smart with gift cards. It's great to see most people are finding a way to redeem their gift cards within 6 months of receiving them. The bottom three colors of the graph below indicate those who redeem within 6 months.

Again, I highly recommend taking a look at the full study. There are a lot of great insights into the world of gift cards. Cheers to the folks at first data for putting this together.