As evidences by this recent fiasco experienced by TXU Energy customers, bankruptcy of companies that issue gift cards is still a problem. Customers who were promised a free gift card for switching to TXU for their electricity service quickly found out the card didn’t work, because the company behind them, Spring Box Services, had gone bankrupt. This is a case where our advice to spend your gift card immediately, would not have helped.
While in this case the customers didn’t have a choice of who the gift card was from, perhaps sticking to gift cards from stable, large retailers is a your best bet.
Here is a fairly straight forward analysis and explanation what happens with gift cards during the bankruptcy process
Because of a deal reached today between New York AG Cuomo and KB Toys, you have until Jan 11 2009 to redeem your KB Toys gift card. But only in New York, and not online. After that, you are probably SOL. (article)
What is really interesting from the article though, is this statement:
“KB Toys sold as much as $2 million in gift cards this year alone, and currently holds a total of $12 million in unredeemed gift cards. ”
What? Either people saw the writing on the all about KB Toys and avoided buying their gift cards, or KB Toys shows six years worth of gift card sales as unredeemed on its books. Could the size of gift card “breakage” be way larger than anyone thinks?”
Technically, this isn’t related to gift cards. But, in the cheesy shenanigan department, gift cards kind of remind me of another classic cheesy scam, mail-in rebates. Mail-in rebate processors are more slippery than health insurance companies, if that is possible. Well, things in the mail-in rebate department just got a lot worse as one of the large mail-in rebate processors just filed for chapter 11 (story). Try getting your rebate now!
Looks like Circuit City will again be accepting its gift cards (article), with the recent court approval of its desire to do so. I think the difference between Circuit City and the other recent bankruptcies that involved large sums of unredeemed gift cards (i.e. Sharper Image and such) is that Circuit City appears to really want to stay in business. It’s a step in the right direction.