Fantastic Plastic

What did we do before gift cards? “We bought gifts,” a sarcastic person might say. And while that may be true – think about how much easier purchasing a gift for someone became when anything they could possibly want fit on a tiny piece of plastic? The perfect teacher gift – gift cards. The perfect gift for long a distance relative that only requires regular postage – gift cards. The perfect gift for someone who wants a big gift nobody will get them – save up gift cards. The possibilities of plastic are infinite!

While different sources dispute it’s origins, the plastic gift card we have come to love emerged around 1995 in the United States, presumably by Blockbuster. Earlier versions of the gift card did not work very well, and Blockbuster was the first to have functional ones. Fast forward to this season and gift cards are ranked as one of the top holiday gifts for men and women. And, thanks to new laws regulating and protecting consumer gift card uses, gift card sales have been projected to increase. The National Retail Federation has predicts 2011 Holiday Retail Sales to increase to $465.6 billion. Yet, while the gift card industry is projected to reach $100 billion in sales by 2012 (by financial services firm, TowerGroup), consumer are also estimated to have a remaining balance of $2.5 billion from 2010 of unused gift cards.

There is definitely an art to spending and purchasing gift cards and they come one of two ways. A retail gift card is issued by that business to be used only at that store. Bank gift cards can be spent like credit cards and are backed by credit companies. Debbie Dickerson, Owner of Cole and Co. says gift cards are a great way to ensure each person gets what they really want. Some of their customers even get creative with the presentation of the gift cards. “We have a customer that purchases some of our Mark Roberts Christmas Fairies and puts the gift card in the fairy’s hands for her grandchildren,” Dickerson explained.

And while all of the gift cards are logged through the computer system at their store, technology isn’t error-proof. She recommends saving the receipt with the balance as a precautionary measure. “It is not a bad idea,” she said. “We have never had any problems, but I do know there is room for computer error and the proper amount may not be loaded to the gift card. Better safe than sorry!” She also recommends that if the card was given to you, make sure to spend it on something for yourself.

On the other end of the retail gift card spectrum are restaurant gift cards. Restaurant cards are the perfect gift for that person on your list you have no clue what to get. Everyone eats, so why not a gift card to their favorite restaurant? Ashleigh Endicott, Marketing Manager for Lonestar Restaurants, reports that gift cards are a large part of the company’s business during holidays. They also have some special promotions going on this season for gift card purchasers. “Between Nov. 14, and Dec. 31, guests can give and receive! If they buy $25 in gift cards at Smashburger they will get $5 in ‘Smashbucks’ for their next purchase! And for TCBY, if guests buy a $25 gift card they get a $5 gift card for themselves!”

And while there are no stipulations on their retail gift cards, special promotions such as ‘Smashbucks’ are available for in-store guests only. Gift cards can also be purchased via the restaurant’s website for those wanting to avoid holiday traffic altogether. Their most popular item is the $25 gift card “because it is perfect for a family dinner at Smashburger or dessert at TCBY!” Endicott reports that while most customers spend their card in January, there is a small percentage that either misplace the card or don’t ever use them. And while many customers spend the entire gift card with one purchase, the majority typically has a couple dollars left on the card. “A lot of times when a small balance like this is left on the card guests forget to use the card on their next trip in, so they go unused most of the time,” Endicott reports.

For gift card fanatics, or those who forget they have gift cards, here are some tips from the Federal Trade Commission to keep in mind when you are purchasing and spending your gift cards this season. First, purchase gift cards from loyal sources. The FTC reports, “Avoid buying gift cards from online auction sites because the cards may be counterfeit or may have been obtained fraudulently.” Check to see if any fees will be deducted from the card after it is purchased. Include the balance receipt when you gift the card in case the balance did not load onto the card correctly. Consider the financial reputation of the business. If you think that retailer may go out of business, purchase a gift card elsewhere. Remember, a gift card to a store no longer in business is not worth anything. Additional tips are available at ftc.gov.

Endicott offers some final tips for gift card shoppers. “I leave all my gift cards in the cash part of my wallet. That way, when I go to get money I will see that I have a gift card and use it! Also, find places that offer gift card incentives for you! If you are going to give you might as well receive for yourself. If you are buying multiples gift cards, this can really add up!”

Finally, you can’t play the game if you don’t know the rules. Not all businesses are as honest as the many wonderful retailers here in East Texas. New laws for gift cards according to the FTC and the CARD Act regulate that money on a gift card cannot expire for five years from the date the card was bought, or the last date money was put on the card. If the expiration date listed is earlier than this, they must transfer the balance to a new card for you, at no cost. Second, you can only be charged inactivity fees when a card has been inactive for a year (and only charged once a month). Third, it is legal for companies to charge a fee to purchase a card or replace one. Last, the retailer must have the expiration date and fees “clearly displayed” on the card or packaging. To file a complaint for retail cards, consumers can visit ftc.gov or call their toll-free number 1-877-FTC-HELP to report fraudulent, deceptive and unfair business practices. Consumers can also file a complaint with the state Attorney General. And for cards issued by national banks, customers can call 800-613-6743 to report problems or email the OCC by e-mailing customer.assistance@occ.treas.gov.