Recipient Beware: Gift Cards May Lose Value

Gift cards can be found everywhere--from your local grocery store to your favorite bank. But are you really receiving what you think you are buying?



Arizona Attorney General Terry Goddard is pushing for a law that requires disclosure that there are fees for using many of the popular cards and even fees for not using them.



These gift cards are what gift certificates used to be: a way to purchase a gift for someone and let them pick it out. Sounds ideal but it isn't always what it seems. The hidden fees include a "dormancy fee" where the retailer starts deducting from the remaining value on the card if it is not used within a certain period of time. For example, Gail Hillebrand, senior attorney for Consumers Union, said her staffers found that K-B Toys charges $1.50 a month after 24 months. Other retailers who charge similar fees include Kmart, Kohl's, Toys R Us and even restaurants like Red Lobster. And there is usually an expiration date, when the card becomes worthless and the money that was spent purchasing the card is down the drain.



Banks have also gotten into the business by issuing gift cards which can be used at any merchant accepting regular credit cards like Visa and American Express. But these cards also have up-front fees in addition to the maintenance charges and expiration dates.



Posting a sign at the store or on the website where the card is purchased isn't enough. That only informs the buyer. The recipient of the gift card has no way of knowing that the gift card they have been given in good faith is slowly becoming worthless the longer they keep it.



There is another option to a gift card. Select-A-Gift is a program with gift values ranging from $25 on up to over $1,000. You can buy one or as many as you wish. The recipient receives a catalog of gift selections based on the price that you purchased. They can redeem the card online or on the web and there are no fees other than the purchase price. Be aware that this is a "gift program" however and the value of the gift, which includes the catalog, gift card, and shipping to the recipient is usually less than the purchase price. In other words, you could go to Best Buys or Costco and buy the same gift for less money but you would have to pick it out, wrap it and ship it to the recipient. What you are paying for with the Select-A-Gift program is convenience. To check out this program, go to http://www.corporategiftnet.com and click on Corporate Gift Program.