OPINION & EDITORIAL
‘Tis the season to cheat consumers?
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Also by Laura Brennan:
- Fair Trade practice virtuous endeavor (November 13, 2007)
- Landlords price out UW students (October 29, 2007)
- Charter cuts cord on wireless startups (October 15, 2007)
- SAFEride hardly lives up to name (October 1, 2007)
- Apple users of the world, unite: UW offers little support for Mac (September 19, 2007)
Related Stories:
- Material world of gifts (November 30, 2004)
- Carols, capitols and robot dogs (December 11, 2001)
- 'Merry' Christmas (December 12, 2002)
- The fashionable male (November 7, 2001)
- Students should take responsiblity for credit card debts (April 12, 2007)
by Laura Brennan
Monday, November 26, 2007
Call me a Scrooge if you like, but I've got a problem with
gift cards.
As I was packing up my belongings to head home for
Thanksgiving, I discovered a Best Buy gift card still loaded with a large sum
floating around beneath a well-worn pair of reindeer socks. Hurrah! Christmas
money! Never mind how it ended up in my sock drawer — there is nothing like
finding a little money tucked away right before the holidays.
Imagine my surprise when I realized that I had already spent
that money on someone's Christmas present; I had shoved it right into the
pockets of Best Buy's CEO, Brad Anderson.
It's happened to all of us — a gift card that expired before
you even remembered that you had it. Some cards expire in a year, others two,
some even five years. Once they expire, they're worthless, and some stores even
make it a point to chew up their value before they expire with monthly
"inactivity" or "dormancy" fees. These fees, imposed after a specific amount of
time, usually start as a small amount taken out of the card's value each month,
but can reduce the card's balance to zero in as little as a year.
In many states, stores are required to turn over the unused
or expired money on a gift card to the state as unclaimed property, and the
cardholder can reclaim the money from the state. Some states even prohibit
expiration dates altogether and require stores to accept the gift card
indefinitely, and others allow the stores to keep the money only if their cards
have no expiration date. Others have restrictions, such as Wyoming, which only
lets merchants keep sums of $100 or less.
Wisconsin is part of the minority of states that let stores
keep every cent on that gift card with no strings attached if it is not
redeemed before its expiration. This flies in the face of Wisconsin's long
history of consumer protection and is perhaps one of our Legislature's dirtiest
little secrets.
Current Wisconsin law doesn't regulate gift cards at all.
This is why Best Buy and other stores in Wisconsin get to keep your expired
gift card money. In this case, if you don't use it, you really do lose it. Past
efforts to legislate gift cards in Wisconsin have flopped, but there are
currently four bills pending in the state Legislature that are making another
attempt to protect consumers at widely varying levels.
One merchant-friendly bill — AB 360 — requires stores to
disclose expiration dates and service fees, but imposes no limits on those fees
or expiration dates. Under a recent and particularly irresponsible amendment to
SB 191, verbal disclosure is sufficient — the expiration date doesn't even have
to be on the card.
Two consumer-friendly bills — SB 245 and AB 471 — prohibit
expiration dates and service charges on gift cards.
All four bills are working their way through the committee
process, but their success is unsure. If history is any indication, powerful
lobbyists for merchant trade groups such as the Wisconsin Restaurant
Association will successfully kill any gift card legislation prohibiting expiration
dates and inactivity fees and will support a disclosure law only if they decide
that some sort of legislation is inevitable and a disclosure law is the lesser
evil.
A mere glance at past sales explains why merchants take this
issue seriously. According to Consumer Reports, 2006 gift card sales reached
$80 billion, of which 10 percent — $8 billion — expired or went unused. In
states with laws like Wisconsin's, the stores get to keep the money, which is
recorded as "profit."
A more accurate term would be legalized theft.
And how could I forget my dear friend Best Buy, which,
according to Consumer Reports, recorded a $43 million gain in 2006 from gift
cards that it decided were likely to expire or go unused. You might want to ask
for something else this Christmas.
Unfortunately,
none of the four current bills address the elephant in the room — who gets the
money from expired gift cards. They are debating over disclosures and
prohibitions, but not over amending Wisconsin's abandoned property law to
include gift cards — perhaps the more important point. If this isn't changed,
then merchants in Wisconsin will continue to profit hugely from expired or
forgotten gift cards.
If
greedy merchants insist on draining our gift cards with expiration dates, a
slew of fees and legal jargon, then that money should be used to benefit public
institutions like education and health care, not some big-box executive's
fourth vacation home.
If more enlightened merchants are willing to issue gift cards with no expiration date or monthly fees, let them hold onto the money forever as long as we can use the card forever. Even if we never use them, we will be spared from kicking ourselves every time we clean out our sock drawers.
Laura Brennan (lbrennan@wisc.edu)
is a junior majoring in communicative disorders.
Anonymous (November 26, 2007 @ 8:46am):
Interesting premise, but since you brought up the topic of consumer rights, consider what the Federal Reserve Bank (a private institution) has done to the value of your dollar itself. We are in a period of hyper-inflation. You think rising gasoline prices are a result of greedy oil companies? Think again. The Fed is silently siphoning your purchasing power, and Bush is out there encouraging you to "spend lots 'o money this season."
Anonymous (November 26, 2007 @ 9:08am):
I don't see the point of gift cards. Give cash - if cash "expires" you'll have much bigger problems.
Anonymous (November 26, 2007 @ 10:53am):
what is ac consumer
erin donley (November 26, 2007 @ 3:46pm):
hey great article! we posted a link to it on our site, www.collegenews.com
Anonymous (November 26, 2007 @ 6:00pm):
"Legalized theft"? I have no problems with pro-consumer legislation on this issue, but until such a bill is passed, don't blame retailers for wanting to avoid getting stuck with $8bn in indefinite liabilities on their books. The problem here is in those who stash their gifts in their sock drawers, instead of taking responsibility for the oh-so-strenuous task of picking up your free shit at Best Buy.
Anonymous (November 27, 2007 @ 1:46pm):
"In this case, if you don't use it, you really do lose it."
It's called personal responsibility. You might have heard of it?
Second of all...
http://www.bestbuy.com/site/olspage.jsp?type=category&id=cat09000
Best Buy TOS states
"* Gift cards are not redeemable for cash.
* There is no expiration date."
I would like a law passed requiring newspapers to notify others when an article is fiction, not fact.
Or was the "Gift Card" really a "Phone Card"? Because, I never heard of inactive or maintenance fees on Gift Cards before. Expiration dates: yes.
Chalk this up as more boring FUD to pass more laws that slowly chip away freedom.
Anonymous (November 27, 2007 @ 9:41pm):
I think the point was that Best Buy "earned" a $43,000,000 profit in 2006 from gift cards that were never used, including the one that was sitting in her sock drawer.
Anonymous (November 30, 2007 @ 2:24pm):
I think you should check your facts before publishing something. Best buy gift cards do not, and never have expired.
Anonymous (December 1, 2007 @ 5:31am):
Are you kidding me? Check the facts, or at least make clear, what you're trying to get across before you print something like this. I know for a fact that Best Buy gift cards don't expire, so anything that you had on that card, is on there. Besides, who's fault is it that people don't spend money on gift cards that are purchased...the company or the consumer? And as for the money that's not redeemed, what are they supposed to do...give it back to whom? Pretty suprising stuff like this gets posted when there are so many inaccuracies.
Anonymous (December 10, 2007 @ 5:25pm):
You obviously did very little research about the topic and simply made up the facts about Best Buy. Their gift cards never expire, you can find this fact right on their website. Next time put forth a little more effort to assure you are sticking to the truth. When grandma gives you a $50 bill, and you stuff it into your sock drawer, should the US gov. call you to remind you to spend it before you lose it? How about if people take responsibility for themselves rather than asking the government to take care of things like this for us.
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