Saturday, December 5, 2009

Gift Cards

The more I think about Gift Cards, the more angry I become regarding their continued existence. In general they represent a very good idea (from the point of view of the issuer) but a very bad idea for subsequent users.

Partly because of the strong culture to give presents e.g. at Christmas, people can feel under considerable pressure - literally - to come up with the goods on such an occasion. Buying a personal gift for someone can take time and possibly end up being problematic (i.e. giving a present that is not appreciated). Offering money as an alternative carries the great benefit that it can be then potentially spent on any item that the recipient wishes to buy. However in general this would be considered too impersonal.

Thus the Gift Card has emerged as something of a stop-gap making it easier for the shopper, while not necessarily restricting the user to the subsequent purchase of just one item.

However there are so many potential problems with Gift Cards that in general they are not worth the trouble.

Firstly, in many cases they do not represent a good substitute for cash. Personally I would prefer to be handed - €100 in cash - than a Gift Voucher to a - say some restaurant for the same amount. The Gift Voucher in this case is unnecessarily restrictive as regards choice - I could spend the cash on any good or service - while not really carrying much value as a personal gift.

Also largely because of its restrictive nature, many Gift Cards are never subsequently used. Because one may have to make special plans so as to use the Card, once received, many are quickly forgotten about and never subsequently redeemed.

Also the issuers of such cards can put unjustifiable time restrictions on use of the cards (e.g. a year). So in our example €100 euro has already been paid up front to the restaurant. However 13 months later, where I have forgotten - or not found it convenient to yet use the card - it will keep the money while disowning any further liability.

Also - as I have experienced myself - stores can operate in a totally unfriendly consumer manner in honouring cards. I remember one highly reputable store in Dublin that refused to honour the final €15 unspent on my card (when it was temporally mislaid) even though I had the receipt from the store for the balance remaining. I found this refusal somewhat outrageous (especially in view of the fact that I was a regular customer spending thousands of euro annually in the store over a period of 10 years.) On a point of principle I have not shopped there since the incident!

There is another problem that now looms large in that a lot of firms in the current recession are going out of business and will never be in a position to honour Gift Cards issued.

So overall Gift Cards often represent a rip-off where a business can get in plenty of convenient money (with no immediate liability to customers). Then when customers look for paid up commitments to be honoured, it will often be treated as a tiresome inconvenience as if being requested to provide special favours. So for example where a Gift Card represents some service (e.g. right to a helicopter ride) the holder may be continually put at the back of the queue until all "regular customers" have been accommodated.

I would also strongly question present legislation which does precious little to protect consumers against abuse by unscrupulous issuers.


Personally I do not believe that Gift Cards should be issued without providing some extra benefits (that would not accrue to customers making direct cash payments).
Secondly no time restrictions should normally apply. Alternatively if time limits are imposed, the issuer should then be forced by law to hand back the value unredeemed on the card to the customer.

However I do not expect these measures to be taken and the exploitation therefore by the issuers will continue. If their own money was involved in purchasing the Cards, there would be uproar from consumers regarding existing practices. However precisely because such cards are bought by a third party having no connection with their subsequent use, too little questioning takes place.

So, I will not be giving Gift Cards to anyone this Christmas; likewise I sincerely hope that I do not receive any in return.