Franchisees - Gift Certificate Redemption
In 2002 consumers in the United States were expected to spend up to $ 30 billion on gift certificates. Of those issued, it is estimated that 12 % will not be redeemed by consumers. What happens to the estimated $ 3.6 billion paid, but not used?
Many retailers charge monthly fees on unused gift cards so that the cards are ultimately drained of value. In California, one of the strictist state, more than two dozen cases alleging gift certificate violations have been filed against major merchants, such as Sharper Image, Petsmart, Restoration Hardware, Sunglass Hut and Zales.
Some retailer gift certificates have an expiration date with a notation that the certificate will expire unless prohibited by law. Only California, New Hampshire, Hawaii, Massachusetts and Rhode Island have laws limiting the use of expiration dates on gift certificates. In most states gift certificates typically expire in six months to two years.
In California expiration dates are only permitted on gift certificates issued in the state for food, or sold to employers or charities for fund-raising purposes, or distributed as part of a customer rewards program. In 2003 a California law goes on the books that requires a bankrupt company to redeem gift certificates, rather than adding bearers of certificates to their creditor list.
Retailers primarily impose expiration dates to offset the administrative costs of tracking unused gift certificates. Other merchants set expiration dates to motivate shoppers into stores more quickly.
