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Bankrate gift card survey: Consumers need to be wary
New research by Bankrate.com of nearly three dozen leading
retailers and credit card issuers show that gift cards are becoming
more consumer friendly this holiday season -- but consumers still
need to be wary or the gift could be gone.
Bankrate researchers surveyed the gift cards available from the 20
largest U.S. retailers, plus the offerings from Visa, MasterCard,
American Express and Discover. The survey was conducted the week of
Dec. 6.
The key findings of the survey are:
Those nasty fees and expiration dates that make recipients cranky
are going away (in fact, some states have outlawed them);
Only a handful of the companies contacted have expiration dates for
gift cards;
Dormancy fees that reduce the value of the card over time are rare,
as well.
"The devil is in the details," says Karen Christie, vice president
of research and editorial services for Bankrate.com. "Verify how
long the card can be used, whether there are any fees that will
reduce the value of the gift and whether your recipient will be able
to use 100 percent of the value of the gift to purchase merchandise,
receive cash back or both. Be sure that your recipient can get a new
card issued for the remaining balance if the card is lost or stolen,
and keep all of the receipts from the purchase."
The findings are mostly good for consumers and retailers, says Dan
Horne, an associate professor of marketing at Providence College in
Providence, R.I., and an authority on gift cards (he's referred to
by Smith Barney as the "gift card guru").
"The back-end fees, the dormancy fees, are in real tiny print, and
those aren't communicated to the ultimate user," he says. "Those get
everybody riled up ... I certainly advise (retailers) to stay away
from dormancy fees. I don't think, ethically, it's right. You have
the money; you're not incurring any loss.
"The other issue, I think, is it's going to be a public relations
nightmare. Why would you take someone walking into your store with
money and make them mad? I can't imagine treating customers that
way. In such a competitive environment, it doesn't make sense to me
to make a customer mad over money you already have."
Back-end fees and expiration dates are there to get the recipient to
use the card because the card issuer can't record the sale as
revenue until it's been used.
"They don't want to carry these things on the books," says Deby
Samuels, vice president of marketing for Comdata, parent company of
Stored Value Systems, one of the world's leading providers of
electronic gift cards. "It's not booked as revenue until they're
used. You've given me money, but you haven't taken products out of
my store yet. That's what accounting principles tell them they have
to do.
"Because gift cards are bigger items, holiday revenue is not
reported until January. What used to be very clean -- everything
bought by 6 pm. Dec. 24 was holiday revenue -- now, you don't know
what will happen. It's changing the way we report holiday revenue."
Source:
BANK RATE
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