The other day, I received an email from a consumer, he writes:
"I have a $50 gift card from Sparx a family restaurant that closed down suddenly because it is being sued by the government for racial discrimination. What recourse have I?"
This is a great question and it's important to keep in mind: gift cards are essentially a form of unsecured debt. When you buy a gift card you're giving the company an advanced payment for service to be provided later.
When you receive a gift card as a gift, the ownership of that debt has been transferred to you the gift cardholder. Here are a couple of questions to ask when a business closes it's doors:
Are there other locations still in business?
If the answer is yes, (even if it's inconveniently located) the gift card may still be redeemed for goods and services and your best option is to get out there and use your gift card. If traveling to an alternate location is unreasonably far away, call the business, explain your situation and and see if they will provide a refund.
Keep in mind, it's not required they provide such a refund, because you can technically still redeem the gift card. Another option is to sell or trade the gift card online or with a friend.
Did the business file for bankruptcy protection?
If no locations remain open, it's likely the business filed for some for of bankruptcy protection because it was unable to meet it's financial obligations. In this scenario, gift cardholders are out of luck. In short, they must stand in line with all other creditors to be repaid and, as it turns out, gift cardholders fall low on that list because of their nature (unsecured, low dollar amount per creditor, etc.).
It's possible the business closed and did not file for bankruptcy protection. In this scenario, you should contact the business owner and request a full cash (check) refund. In short, you are still owed goods and services and the business is unable to provide such service; therefore, a refund is appropriate. It would be similar to being a supplier who delivers steaks for the last week a restaurant is open. The should still receive payment for the services provided.
If you contact the business and they are not willing to give you a refund (and they did not file for bankruptcy protection), contact your state attorney general's office and and ask for guidance in the matter. After all, there are likely many others in your same predicament.
Will competing business accept the gift card?
Accept a competitors gift card after they go out of business has become a savvy marketing move. Basically, it's a great opportunity for a business to attract new customers and gain goodwill within the community. A competing business may not be able to verify the balance of another company's gift card, so they may offer a free appetizer or a percentage off your meal. While it's not be the full value of your gift card, at least you'll get something out of it.
A Gift Card Best Practice
It's always a smart to redeem a gift card sooner than later. By leaving a gift card in your wallet or drawer you're dramatically increasing the chance of losing value. It could be from a business going under, post-sale fees, expiation dates or simply forgetting about and loosing the gift card.
We understand it's not easy to remember which gift cards you own. As a result, ScripSmart offers a free account system for registering gift cards. Just sign up, add the gift cards you own to your ScripSmart account and we'll send you a monthly reminder via email.