Tags: gift | cards | holder | use

$1 Billion Lying Around in Unused Gift Cards

By    |   Wednesday, 11 December 2013 07:26 AM

Gift cards are popular presents, but if history is an indicator, many people who receive them this holiday season won't use them.

Research suggests gift cards could be the most popular gift this year. Sales, which were about $80 billion in 2007, are forecasted to reach $118 billion in 2013, a 47 percent increase, according to a new report from advisory firm CEB TowerGroup.

Demand for gift cards is surging, and the number that goes unused is shrinking, from about 10 percent in 2007 to 1 percent this year. But that seemingly small percentage represents over $1 billion per year that is still unredeemed, Brian Riley, research director at CEB TowerGroup, tells MarketWatch.

Editor’s Note:
Add Up to $152,046 to Your Social Security Benefits Using Weird Trick

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 deems that gift cards cannot expire for five years from the date of purchase or the date that value is added. This may help explain why so many aren't used, experts say.

Riley points out that data show only about 50 percent of small businesses survive for five years. If consumers who are holding gift cards for those failed businesses want to pursue the matter, they will find themselves in line behind creditors.

But it isn't only small businesses that fail. And sometimes gift card holders have no legal standing at all.

When book retailer Borders went belly-up in 2011, about 17.7 million people were holding gift cards valued collectively at over $210 million. According to NPR, a Manhattan judge upheld a previous decision that declared the gift card holders are not entitled to anything.

The five-year minimum expiration date can also encourage people to postpone using the cards, increasing chances of the cards getting lost, says Elliot Bohm, CEO of CardCash.com, a company that buys gift cards at a discount.

"Even if the gift card doesn't have an expiration date, it's better to use it sooner rather than later," he tells MarketWatch.

Some consumers may run out time thinking they are protected by the Card Act's five-year expiration protection when that's actually not the case, Odysseas Papadimitriou, CEO of CardHub.com, explains to MarketWatch.

He says gift cards obtained through a rewards or loyalty programs are not subject to the same protections as store-bought gift cards and may expire sooner.

And while research from Discover Financial Services shows that one-third of Americans want gift cards this Christmas, they may not want them from just anyone.

Immediate family members and baby boomers are less likely to appreciate gift cards, says Pamela Eyring, president of the Protocol School of Washington, which focuses on etiquette. "It's regarded as a thoughtless," she tells MarketWatch. "You don't even have to wrap it."

When gift cards remain unused and they ultimately do expire, some retailers reclaim the lingering funds as revenue, Riley tells Philly.com.

And some states, such as New York and New Jersey, have been known to seize the funds for their own coffers.

Editor’s Note: Add Up to $152,046 to Your Social Security Benefits Using Weird Trick

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Gift cards are popular presents, but if history is an indicator, many people who receive them this holiday season won't use them.
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2013-26-11
Wednesday, 11 December 2013 07:26 AM
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