Don’t get stung by gift card gotchas

Gift cards are among the season’s hottest tickets, a must-have item on the shopping list of 60 percent of Americans surveyed by Consumer Reports National Research Center. Female respondents, in fact, said they’d rather receive a gift card than anything else, including jewelry. The National Retail Federation, a trade group, estimates that shoppers will spend nearly $25 billion on the cards this holiday season, a $6 billion increase over last year. That’s a lot of plastic. 

It’s easy to understand the cards’ appeal. They can be the perfect present for finicky family members, friends, and co-workers; anyone who’s dicey to shop for. But before purchasing any card, there are a few things you need to know: 

Use it or lose it. Some gift cards expire, and the expiration date can be as soon as 12 months from the date of issuance. A few states have laws that prohibit the selling of cards that expire, but in most of the country you have little recourse. Interestingly, gift cards that aren’t used after more than a few years are often considered abandoned property by states, the National Retail Federation says. Where these laws apply, retailers are required to turn over unused gift-card dollars to state governments -- sometimes in as little as two to three years, 

Beware of hidden fees. Gift cards take several basic forms: Cards issued by merchants, for redemption at a particular store, restaurant, movie theater and the like; those sold by shopping centers for various stores inside the mall; and cards dispensed via banks and credit card companies that can be used almost anywhere. Bank, credit card, and mall-issued cards are more likely to expire and tack on annoying activation, maintenance, inactivity, and transaction fees. Some cards depreciate in value from month to month, if they remain dormant. While most gift cards cannot be redeemed for cash, those from banks may allow withdrawals from an ATM. Be sure to ask about fees, expiration dates, and perks like cash-back before purchasing any card. You can also check the fine print online by clicking on gift card terms, conditions, and policies. 

Keep a record of your card purchase. Although store policies vary, some retailers will replace a lost or stolen gift card, but only if have proof of purchase -- an original receipt or registration on the issuer’s Web site. You may have to pay a fee for a reissued card, but it’s better than being told tough luck, which is the position of many merchants. 

Avoid gift cards sold via online auction sites. Why would someone sell a gift card with a face value of $250 for, say, $200 on eBay? It’s like giving away cash. The answer: the gift card may have been bought with a stolen credit card, could be a fake, or contains less value than advertised, targeting customers looks for a bargain. You know the old saying, “If it looks sounds too good to be true, it probably is.” When you buy a gift card on an auction site, you’re taking a risk. 

Use care when buying gift cards from display racks. This is more of a heads up than a widespread problem, but take notice. There have been a few reports of crooks writing down the serial numbers of gift cards displayed on racks or hanging near checkout counters, even tampering with the seal protecting the PIN number on back. The con works like this: After a few days, the thief phones an 800 number to check on the card’s balance, a clear indication it has been activated. Next, the crook goes online to shop, wiping out the balance. It’s a good idea to check for obvious signs of tampering, purchase a card that’s hidden behind a wall of others or, if possible, opt for a card that comes from customer service, a secured area out of public view.

Comments

[Jake Villareal]

My son received a Mastercard gift card from Coinstar for his birthday. The problem is, it was not activated in store and my sister no longer have the receipt. When I called the company, I was pretty much told "tough luck" that it was like losing cash. I already told my family and friends not to give my children any cards again.