Gift Cards Could Be Risky Business

Because of the shaky retail atmosphere, shoppers may want to proceed with caution before buying a gift card.

Last year, the Sharper Image gift-card debacle proved to be an important eye-opener when the company pushed its holiday gift cards as a great solution to gift giving and then filed Chapter 11 after the holiday season was over.

Sharper Image gift-card holders learned that the bankruptcy laws view gift cards, reward cards, store credits and gift certificates as a loan, not cash, and card holders are classed as unsecured creditors, which to bankruptcy courts are low on the list of creditors to be paid back.

Sharper Image did eventually come up with a compromise. If a gift card holder had a $25 card, they had to purchase at least $50 to be able to use the card. If they had a partially used card they had to spend twice the remaining balance in order to redeem it.

With the uncertainty of which retailers will survive the depressed holiday season, gift cards could be risky business for consumers.

If You Get a Gift Card

Gift-card recipients may want consider redeeming the gift cards for merchandise as soon as possible and before the end of January. Come March, no one knows which retailers will still be standing.

Background:
Sharper Image Gift Cards Are Worthless
Sharper Image Will Now Honor Gift Cards, But With Conditions