Tweeter files for bankruptcy: use those gift cards fast

The miserable economy has claimed another victim. With consumer spending at a trickle, Tweeter, the mid- to high-end electronics retailer, will be closing its doors for good following a liquidation sale. The company had planned to stop accepting gift cards today, but a last-minute plea by various state’s attorneys general on Friday won a deadline extension. If you have a Tweeter gift card, get moving because the liquidation sale could end at any time. You can find a list of Tweeter store locations here. Ironically, Tweeter was one of the top-rated brick-and-mortar electronics stores in a recent Consumer Reports article on where to buy electronics.

The company, which filed for bankruptcy (for a second time) earlier this month, is in the process of selling off everything in its stores for 20 to 50 percent off original prices. That includes upscale audio and video brands like Polk, Yamaha, Klipsch, Cambridge, Bose, and Alpine. But don’t automatically assume that Tweeter’s prices are the lowest around. We’ve seen plenty of going-out-of-business sales in which the markdowns appeared more generous than they actually were because they were based on discounts off of unrealistically inflated “original” retail prices. Check out comparison shopping Web sites like Shopzilla and Yahoo Shopping to determine whether you’re really getting a bargain.  Since all sales are final, it’s important to do your homework.

Tweeter filed for bankruptcy on Nov. 5, and five days later, U.S. Bankruptcy Court in Delaware issued an order authorizing the chain to honor its gift cards through Nov. 15.  The Connecticut Attorney General’s Office  and other AGs returned to court last week to request that Tweeter continue redeeming gift cards until the stores shut down for good. The court agreed. The closing sales are scheduled to end by Dec. 31, but could occur sooner, depending on how quickly inventories run dry and other circumstances.

“This decision gives consumers more time to use their cards for merchandise, assuring they receive full face value,” said Connecticut Attorney General Richard Blumenthal.

We’ve said it before and we’ll say it again. Gift cards are a dicey proposition, especially at a time when more than a few merchants are going under. Earlier last week, Circuit City, another electronics giant, filed for Chapter 11 bankruptcy protection. Unlike Tweeter, however, Circuit City hopes to reorganize and get its financial house in order, and remain in business. At this point, Circuit City is still honoring its gift cards.

We’re also sour on gift cards because many come with strings attached such as expiration dates, inactivity fees, transaction fees, and service charges that can devalue the card. In addition, the latest Consumer Report holiday poll reveals that one-quarter of Americans who received a gift card last holiday season have yet to use it. That’s potentially money down the drain.

Comments

[fran]

michigan just passed a law i believe that makes gift cards that are bought from now on in michigan able to be used for 5 years with no fees tacked on something that should be a minimum in any state that allows gift cards to be bought.

TOD SAYS: Thanks for the heads up, Fran. I just researched the Michigan law and spoke to folks in the Attorney General's office. Check out my latest post. The problem is the law doesn't apply to those bank-issued cards, such as the Amex Gift Card, which tend to have the most onerous fees. The Feds need to step in.

[lk]

lay-away can also be a dicey proposition. on last week's local news a man who put down $700 on a $3000 TV at Tweeter got a letter saying he was a 'creditor' - his money was part of the bankrupt company's assets. basically he had just lost it; they refused to give him any credit toward the TV which they had in stock.