Consumer Confusion Spikes Over Gift Cards

October 30, 2009 by tisha

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Holidays are a popular time to give the gift of gift cards. Since so many people are hard to shop for, gift givers prefer GetHookedthe ease and convenience of retail gift cards. However, those seemingly brilliant ideas are not always as clear-cut as they seem. In fact, a recent poll conducted by the Consumer Federation of America found that a good majority of the nation’s consumers have no clear idea of how gift cards work. Only about half of the polled consumers had any idea that most gift cards charge a monthly fee after an intial period has passed.

It is estimated that more than $50 million will be spent on gift cars this holiday season. But consumers who are unaware of the upfront costs and the monthly fees that will be incurred might not be prepared for the reality. Many of these cards are considered to be very controversioal and have even gained the attention of Congress, who recently passed new legislation to improve consumer protection defenses.

The National Association of Consumer Agency Administrators, along with the CFA have produced brochures about consumer gift cards and are expected to make them available to large retailers, including Walgreen’s and CVS stores. The brochures spell out the areas where buyers should be paying careful attention, such as the expiration dates of the card,  the purchase price, and any monthly fees that will be incurred after the initial period has ended per each card distributor.

Additionally, it is recommended that all gift cards be used as soon as recieved in order to ensure less fees and full value of the card for purchase. Many times, retailers make a tidy profit from just the 10% of people who never use the card. Due to the alrighty tight economy, consumers are urged to use the card rather than lose the card because to do so would only be like throwing money out of the window.

The survey that was conducted also found some other surprising statistics including:

  • Only a third of the people surveyed knew that purchasing a gift card could cost them between $4-$7.
  • Only 39% of those surveyed were clear that there are retail locations unwilling to split the ability of payment between the gift card and cash.
  • 41% of consumers polled knew that federal laws were ablout to change that stops fees from being incurred on gift cards if not used within a 12 month time span.

Overall, consumers have even more ammunition to get educated about the protection laws being established, especially during the holiday shopping season. Being informed is the way to go when it comes to personal finance intelligence.


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