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Gift Cards (The Gift That May Stop Giving) *

Attention holiday shoppers. Not sure what to buy Aunt Matilda or cousin George? A gift card allows them to buy whatever they like? Maybe. Large retailers such as Sharper Image, Bombay Company and Linens ‘N Things have filed for bankruptcy or gone out of business, leaving behind millions of dollars in unused gift cards. In bankruptcy, money left on a gift card is treated as a debt, which the bankruptcy court can decide if it is to be repaid, and how. If the retailer stays in business, the court may allow it to continue to honor its cards, but even then consumers may not get the full value. Sharper Image, for example, was allowed to continue accepting gift cards, but only if the cardholder spent twice the value of the card in a single transaction. Bombay Company was allowed to pay its gift-card holders 25 cents on the dollar. If the retailer closes its doors, it is possible the consumer’s only recourse would be to file a claim and stand in line with the other unsecured creditors.

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Shop, Then Drop

Potentially signaling tougher enforcement initiatives ahead, New York recently enacted a law that gives consumers who shop online, essentially the same types of consumer protections available when buying over the phone or through the mail. New York’s law that now applies to sales over the Internet means that merchants must reasonably expect to be able to ship the goods ordered within 30 days or the order can’t be accepted; merchants who use a post office box or other fulfillment mail address must display (prominently) the company’s name and physical street address; merchants must allow a consumer to cancel any order that doesn’t actually ship within 30 days and either obtain a refund or pick substitute merchandise; the merchant must clearly detail the conditions under which the consumer will be entitled to a refund; and the merchant must keep records of consumer complaints that deal with failures to ship or to provide advertised goods and services.