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BBB: Do research before purchasing a gift card

By Rita R. Robison

The holiday season is nearly here. For those looking to give gift cards to family and friends, the Better Business Bureau recommends that you check out any gift card before you buy it.

GiftcardThe BBB has already received nearly 500 complaints against the gift card industry, a huge increase from the 33 complaints received in 2010. In some cases, consumers are disgruntled when they’re given an expired gift card with loaded cash that isn’t usable until the expiration date is corrected. After sending the expired card in for replacement, the consumer is left empty handed when the card fails to ever return to them.

“Consumers need to be on the lookout for gift cards that appear to be ‘open’ or out of their original package, and cards that state an expiration date that is coming up or that has passed,” said Stephen A. Cox, president and CEO of the Council of Better Business Bureaus. “Shoppers should be wary of online auction sites that promise ‘full value guaranteed’ gift cards. It’s sites like these that are prone to selling old, valueless cards that leave the gift giver and receiver distraught.”

The BBB recommends the following tips for both givers and receivers of gift cards:

Know the rules. New federal rules that took effect in August of 2010 are designed to protect consumers; they restrict fees and affect gift card expiration dates. The new rules apply to two types of cards: (1) retail gift cards, which can only be redeemed at the retailers and restaurants that sell them and (2) bank gift cards, which carry the logo of a payment card network such as American Express, Visa, or Mastercard and can be used wherever the brand is accepted.

Check it out. Make sure you are buying from a known and trusted source. Always check out a business at www.bbb.org. Avoid online auction sites, because the cards sold there may be counterfeit or may have been obtained fraudulently.

Read the fine print before buying. Is there a fee to buy the card? Are there shipping and handling fees for cards bought by phone or online? Will any fees be deducted from the card after it’s purchased?

Inspect the card before buying it. Verify that no protective stickers have been removed and that the codes on the back of the card haven’t been scratched off to reveal a PIN number. Report any damaged cards to the store selling the cards.

Provide the receiver with back up. Give the recipient the receipt in case the card is later lost or stolen. Also, before you buy retail gift cards, consider the financial condition of the retailer or restaurant. A card from a business that files for bankruptcy or goes out of business may be worthless. If the business closes a store near the recipient, it may be hard to find another location where the card can be used. A business that files for bankruptcy may honor its gift cards, or a competitor may accept the card. Call the business or its competitor to find out if they’re redeeming the cards, or if they’ll do so at a later date.

Treat the gift card like cash. For receivers, it’s important to report lost or stolen cards to the issuer immediately. Some issuers won’t replace cards that are lost or stolen, while other issuers will, for a fee. Make sure to use gift cards as soon as possible, because it’s not unusual to lose or forget about them.

Copyright 2011, Rita R. Robison, Consumer Specialist

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