Retail bankruptcy filings are expected to be higher than they have been in seventeen years. The number of businesses filing for bankruptcy has increased by 28% over last year.
Gift Cards have become more popular as the best thing to give to someone you don’t know what to get. Last year during the holiday season, over $26 billion dollars was spent on Gift Cards. Many of those cards are still in purses and wallets, unspent and forgotten.
Now, some of the retailers that issued those cards are filing for bankruptcy.
How does this affect the average consumer and what about that Gift Card you received from your dear Aunt Sally for your birthday last month? Is it still usable? If the company that issued that card has filed for bankruptcy, it may not be worth the plastic it is made of.
It’s been noted that any unspent gift cards are considered loans to the company and the company will often suspend any acceptance of gift cards while they are in the process of filing for bankruptcy.
Recently, consumer advocate groups have sent a petition to the Federal Trade Commission (FTC) asking the federal authorities to do more to help consumers who have been losing money on Gift Cards purchased from retailers who filed for bankruptcy. The petition is asking the FTC to require that companies honor their Gift Cards as long as they remain open for business. The petition asks for the companies to stop selling the cards when they file for bankruptcy and to stop other stores from selling the bankrupt cards.
Gift Cards are not like credit cards. The money spent to purchase them is upfront. They are just like a gift certificate. If you don’t spend the money you lose it. What’s in your wallet?
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