Reporter Resources: Gift Cards
Over the past few years, retail gift cards have become an increasingly popular way to buy products. The Commission has consumer education available on its Web site that contains valuable information about shopping for, and using, gift cards. This can be found at the following link: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt010.shtm.
In addition, the FTC has brought two enforcement actions related to gift card sales recently. The press releases announcing these actions, as well as links to their supporting legal documents can be found at http://www.ftc.gov/opa/2007/05/fyi07246.shtm and http://www.ftc.gov/opa/2007/08/kmart.shtm.
With the recent economic downturn, however, questions have been raised about what consumers can do to protect themselves and their gift card investment if a retailer either files for bankruptcy or goes out of businesses altogether. The Commission has recently received a joint petition requesting a rulemaking and other actions relating to gift cards from Consumers Union, The Consumer Federation of America, The National Consumer Law Center, and the U.S. Public Interest Research Group that the agency is currently evaluating. The petition, which can be found at http://www.ftc.gov/opa/reporter/docs/consumersunionpetition.pdf, states that “gift cards do not have adequate consumer protections, particularly when a retailer files for bankruptcy.”
Accordingly, the groups have asked the FTC to consider a variety of ways to protect consumers’ gift card purchases, most notably by: 1) declaring the sale of gift cards without both segregating the funds and holding those funds in trust to be an unlawful and deceptive practice; and 2) developing new rules that would require retailers to both segregate and hold in trust gift card funds, and to automatically honor a gift card from those funds in most instances.
On November 14, 2008, the Commission sent an interim reply to the petitioners, detailing what we have done in the area of prepaid cards, and issues we need to consider regarding gift cards and bankruptcy. That interim reply can be found at: http://www.ftc.gov/opa/reporter/docs/081114interimletter_signed.pdf, and when the final reply is transmitted, it will be posted on the FTC’s Web site and as a link to this page.
