Consumer Alert: Gift Cards - Store Closings
What happens if you receive a gift card from a retailer that's going out of business or has filed for bankruptcy? A mass e-mail has been circulating the Web warning consumers to use or lose their gift cards due to the current economic downturn and multiple North American store closings.
Consumers need to separate fact from fiction amid growing concerns about the validity of gift cards as our economy struggles. The Ministry of Consumer Services advises consumers to be aware of how the validity of their gift card would be affected if a store went bankrupt.
If a retailer (e.g. large, chain-stores) has closed one or more of its locations, consumers will likely still be able to use their gift cards at other retailer locations. However, if a retailer has closed as a result of financial difficulties or bankruptcy, consumers may direct their concerns to the trustee in bankruptcy.
Shopping malls offering gift cards redeemable at more than one unaffiliated store must disclose all service fees to consumers. All the conditions, limitations and information relating to the gift cards must be displayed or disclosed to the purchaser. Fees can be charged for shopping mall gift cards and others that are redeemable at more than one unaffiliated store. Expiry dates are banned from mall gift cards. If a retailer in a mall goes under, consumer can use their card at any other retailer in the mall.
Stores selling cards with the knowledge of their impending closure may be in violation of the Consumer Protection Act. The Act prohibits merchants from telling consumers that goods or services will be available or can be delivered where the merchant knows or should know that this is not the case.
Consumers are always encouraged to be smart, informed consumers by using their gift cards promptly. Remember, gift cards are as good as cash. Ontario gift cards retain their dollar value until consumers have used it up and as long as the card issuer remains in business. So, buy from a reputable and financially sound retailer and keep them in a safe place with your original receipt as a guarantee of the value of the card. Moreover, always read and understand the terms and conditions of each gift card before you buy.
Consumers deserve to get what they pay for – the government has strengthened its consumer protection laws to eliminate expiry dates on retail gift cards.
On October 1, 2007, the Consumer Protection Act was amended to ban expiry dates and most fees on gift cards purchased after that date to ensure consumers get their full value, regardless of when they use them. The enhanced consumer protection measures now in force include:
- Prohibiting expiry dates on gift cards and certificates
- Restricting fees charged for gift cards to a) customizing a gift card, or b) replacing a lost or stolen gift card;
- Requiring the clear and prominent disclosure of any terms and conditions relating to a gift card (e.g., any limits to redeeming a card).
Consumers with questions about gift cards can contact the ministry at 1-800-889-9768 or consumer@ontario.ca.
