E-mail misleads consumers about gift cards

An e-mail has been making its way across the Internet during the past few weeks, urging consumers to avoid buying gift cards from some 30 national merchants, suggesting the companies’ financial troubles could render the cards worthless.

Trouble is, the scare mail is based largely on old news, misleading information, or falsehoods. But there’s enough truth to some of the claims to make the message appear credible, thus discouraging some shoppers from buying the cards, which a recent Consumer Reports poll revealed are among the most-wanted and most-purchased holiday gifts this year. The e-mail cautions consumers about buying gift cards from merchants including Gap, Talbots, Home Depot, and Foot Locker, among others. 

According to ABC Television affiliate WTVD in Raleigh-Durham, N.C., which covered the story, most of the closings cited in the e-mail were announced nine months to a year ago (Sharper Image, for instance filed for bankruptcy protection last February); the e-mail makes no mention that some of the chains are adding stores while shuttering others, nor does it note that many of the companies that are downsizing their brick-an-mortar operations maintain a strong online shopping presence. 

The phantom e-mail urges consumers to use their gift cards “before it’s too late.”

 

We received an e-mail today from Neil Fiske, the CEO of Eddie Bauer, one of the apparel retailers targeted in the e-mail, who wanted to set the record straight:

“It has come to our attention that misleading information is circulating via email as part of a hoax intended to discourage consumers from buying gift cards from a number of retailers including Eddie Bauer. We want to set the record straight.

Eddie Bauer has been in business since 1920 and operates 376 retail stores throughout North America. We also have a robust online and catalog division. In our March 2008 annual report, we announced both the opening of new locations as well as the closing of some older locations as part of our normal course of business. The stores referenced were all closed in January 2008. In 2009, we will again open and close a handful of stores as part of our normal business plan.

Eddie Bauer remains committed to providing our customers with outstanding quality, value and service, now and for many years to come. Our gift cards are a great option for the holidays. You can purchase and redeem them at any of our retail stores, through our catalogs or at eddiebauer.com. We look forward to serving you this holiday season.”

While it’s true that you could end up with a worthless piece of plastic if a company goes out of business or files for bankruptcy protection with the courts, that’s not always the case. For example, Circuit City is currently honoring its gift cards, even though chain filed for Chapter 11 protection earlier this month. However, the fluid nature of bankruptcy proceedings could change the situation at any time. Thus, it makes sense to think twice about purchasing a gift card from companies that are legitimately on the brink.

Consumer Reports takes issue with gift cards that come with expiration dates, transaction fees, and inactivity fees that unfairly diminish a card’s value over time. That’s not the case with all cards. In general, cards issued by individual retailers tend to have fewer strings attached than those issued by credit-card companies like Visa and American Express. It’s also worth noting that many cards of all stripes go unused. According to our poll one in four people who received a gift card last year have yet to spend it.

Comments

[KC]

I use gift cards as quickly as possible. After all it is cash on which you are not receiving any interest.

[Bryk]

I tried to use a Linens & Things Gift Card last sunday (which was actually a store credit that they refused to give us cash for when we returned an item earlier this year.)

After multiple attempts to read by the helpful cashier, the register would not return any balance on the card (there should have been $13 credit). She gave us an 1-800 number to call, but life's too short to spend hours on the phone for $13. Better use all those merchandise return cards by the end of the year folks!!