Holidays

  Attorney General Martha Coakley offers consumers advice when purchasing gift cards or certificates this holiday season:
 

• Under Massachusetts Law, a gift certificate or a merchandise credit must be redeemable for 7 years from the date of issuance. The seller must indicate the date of issuance and expiration date on the face of the certificate.

 

• Once a consumer redeems the gift certificate or gift card for 90% of its value, the balance is redeemable in cash.  A purchaser or holder of a gift certificate which, by its terms, authorizes the purchaser or holder to add value, which has been redeemed in part, such that the value remaining is $5.00 or less, must make an election to receive the balance in cash or continue using the gift certificate. A gift certificate with a zero balance is void.

Note, however, that there are some serious restrictions on the applicability of these protections, including the seven year expiration date.

• State law does not apply to gift cards issued by a national bank, even though these cards may be issued by an entity other than the bank.  For instance, Simon Mall Gift Cards do not follow the seven year rule and also charge fees, because the cards are issued in conjunction with a national bank.  National bank-issued cards may be redeemable for a shorter period of time—often one or two years.  These cards may also have fees attached that will diminish the value of the card over time—some have monthly "maintenance" or "dormancy" fees that may kick in when the card is not used within a few months; they may also have fees assessed for checking on the value remaining on the card; lost or stolen card fees; or replacement fees if the card expires by its own terms but you still have value remaining on the card you want to use.  These fees must be disclosed to you, so read all materials provided with the card.
   
• Read all accompanying literature that comes with the card or visit the website of the company you are purchasing the card from to ensure that you know what you are getting.   Be sure to provide all of this information to the person to whom you are giving a gift card or gift certificate. 
  
  

What if the retailer I buy a gift certificate from goes out of business?  

• In some, but not all cases, you may be able to receive some reimbursement for the value of the gift certificate. 

 

• If the retailer files for the protection of the bankruptcy court, you should file a document called a "proof of claim" with the court. Include whatever information you have about the value of the certificate, and a photocopy of the certificate or gift card.  Bankruptcy allows for the payment of claims depending on assets available.   

 

• If a company has announced that it has filed for Chapter 11 bankruptcy and is "reorganizing," the company may ask the court for the ability to honor gift certificates.  It may be in the best interests of a company to maintain goodwill if it wants to continue operating, so this request makes good business sense, but it is not always certain that this request will be made to the court.  

 

• If a company files for "liquidation" in bankruptcy, through Chapter 7, there may not be assets available to pay off all or even some of the value of consumer gift certificates.  Some bankruptcy courts consider gift certificates to be "consumer deposits" under the bankruptcy code, entitled to certain unsecured creditor priority over some other claims, but not all courts consider this to be the case.   

 

• If the retailer does not file for bankruptcy, but simply closes, that does not necessarily mean that you won't be able to use your gift certificate.  Some businesses file in state court for an "assignment for the benefit of creditors," and that procedure may also provide for an orderly distribution of assets.   

 

• Some businesses may otherwise provide for a way to transfer the value of a gift certificate to another location or to someone who buys the customer list.   

 

• If a business unfairly took advantage of consumers, the Attorney General's Office may also bring a legal action seeking recovery of the value of unredeemed gift certificates or gift cards.
   

 Consumers that have questions about retail laws in Massachusetts or wish to make a complaint against a business should contact the Attorney General's Consumer Hotline at (617) 727-8400. The Attorney General's Website, www.mass.gov/ago, offers additional tips on retail rights and consumer protections.

The above was excerpted from the Attorney General's "Consumer's Advice for Holiday Shopping Season."

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

WBZ's Most Popular

• Bay State Roots, Hollywood Fame
• Jewish Celebrities
• The Tattooed Ladies of Hollywood
• Crowd Saves Woman After Fall On Tracks
• Neighbors Try To Silence Old Ironsides
• Ft. Hood Hero Worked In MA Restaurant
• Watch Latest Weather Forecast
• Join In - Conversation Nation