Before sending off a gift card in the mail for payment, make sure to research the company thoroughly. Here are a few factors the Greater Maryland Better Business Bureau recommends consumers consider:
- Determine how long the company has been in business. - Check with Better Business Bureau at bbb.org for customer experience and most importantly how or if the business addressed the issues. - Look to see if the company is affiliated with a larger, well- known parent company. - Read the company's policies carefully to see if there are money- back guarantees and other consumer protections. - Be sure the company is legitimate before handing over any personally identifying or financial information.
As last-minute shoppers descended on Target Tuesday, the rows of gift cards at the end of the store's checkout lines attracted one customer after another.
There were cards for Starbucks and Groupon and Fandango. Applebee's and Ruby Tuesday and Buffalo Wild Wings also were among dozens of other options.
The gift card business has grown in recent years, with the National Retail Federation predicting $29.8 billion was likely to be spent on the cards this Christmas season. While a convenient option, many gift cards - to the tune of nearly $2 billion - will go unused.
While some customers at the Annapolis Towne Centre at Parole Target said the cards are an impersonal last-minute gift idea, others said they are safer than getting someone a present they may not like.
"For family members you're not particularly close to or know well, it's good because they can go out and get something they want," said Erika Saxon of Annapolis.
Meghan Heil of Severna Park expressed similar sentiments, though she acknowledged how some could see the cards in a negative light.
"It's not really personal," Heil said. "And they may not like it, so it may go to waste. They also know how much you spend on them."
Still, a card for a site such as Groupon, which offers deals for restaurants, museums and other services, keeps the recipient's options open. That's the card Heil was buying.
"You can go out to eat or do activities or buy something that you really like," she said. "It's more of their choice."
Liam Killingstad of Annapolis said you "can't mess up" with a gift card, and that they're especially good for last-minute shopping.
"It's a very nice cop-out," he said. "Even though it's a little impersonal, it's more personal than cash."
Not all gift cards will go to good use. Consumer Reports estimates $1.8 billion worth of gift cards purchased last year are likely to never be redeemed.
Under federal law, store-specific gift cards are good for at least five years. After that, consumers may be charged with fees, though those terms and conditions must be printed clearly on the front or back of the card, on a sticker permanently affixed to the card, or an envelope containing the card.
Typical fees include service charges, fees for inactivity, maintenance fees and reload fees.
Gift cards that are processed through a national credit or debit card service, such as Discover, Visa or MasterCard, don't always have the same protections as store-specific gift cards. If the cards are reloadable, they may not be limited by law as to how long they must be in effect, according to the Maryland Attorney General's Office. The law only requires that the expiration date be clearly disclosed, as well as all fees.
If the card is not reloadable, federal law still prevents expiration in less than five years, but fees may still apply once a month if there has been at least a year of inactivity, the Attorney General's Office said.
The Greater Maryland Better Business Bureau offers the following tips for those who received gift cards this holiday season:
- Spend the gift card as quickly as possible. Even though gift cards have a five-year shelf life, the longer you hold on to it, the more likely you are to forget about it or misplace it.
- If possible, register the card. Most companies will replace lost or stolen gift cards. But the only way this is possible is if you register the card in your name. Some companies will charge a replacement fee for the inconvenience -- but even this is better than missing out on the balance entirely.
- Spend the entire amount so you're not left with pennies. You might be likely to discard a card with a small amount on it, so try to use it up in full.
Jody Thomas, spokeswoman for the Greater Maryland Better Business Bureau, also recommends consumers use their gift cards or certificates quickly in case the business closes. In that case, consumers have little or no protection.
"As a gift card holder, you're at the bottom of the food chain waiting in line to get your money back and that isn't going to happen," she said.
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