E-mail about gift cards misleads, experts say

Herald-Tribune

Chicken Little is alive and well and living somewhere on the Internet, at least it seems that way if you've seen the recent e-mail making the rounds warning customers not to purchase gift cards from certain retailers this holiday season.

Some of the retailers mentioned in the e-mail are having problems, however some of those problems have already been resolved and others are relatively minor with only a fraction of a company's stores being affected.

While some information is misleading, the Missouri attorney general's office said, cash may be the better option.

"There's no way for consumers to be totally safe when purchasing gift cards,æ said Travis Ford, consumer educator with the attorney general's office. "This may be the year not to give gift cards. The only way to be totally safe is to give cash or checks."

In Nevada, Steve Knowles, local Sears franchisee, disagrees, saying that the gift cards are still a good way for people to give gifts. Sears was not among the companies listed in the e-mail.

"I would buy a gift card and use it," Knowles said. "In this day and age a company just can't close their doors, they have to give their employees warning before closing, especially companies the size we're talking about here."

Knowles said that the gift cards are better for some things than using cash or a credit card.

"For those people who don't want to use their credit card online and put that information out there you can use a company's gift card or one of those cash cards that work like a credit card and it isn't tied to your credit at all," Knowles said. "After you use it you don't have to worry about someone having your credit card information since they aren't tied together."

Knowles said that the cash cards can often be refilled and reused.

"A lot of the cards are refillable so you can reuse them whenever you don't want to use your credit card," Knowles said. "You just take them in and put more cash into them and you're ready to go."

The misleading e-mail warns consumers not to purchase gift cards from 32 national retail stores, and much information is incorrect.

Before purchasing a gift card, the attorney general's office offers the following tips:

* Be cautious of gift cards sold at auction Web sites. They could be stolen, counterfeit or not as valuable as advertised.

* Don't discard the receipt in case problems arise when the card is redeemed. If the card is lost, consumers should ask the retailer for a new one.

* Understand the gift card's terms. This includes expiration dates, added fees or "dormancy penalties," charged when the card is not used by a certain date. Gift cards usable only at one retailer are not as likely to have these limitations.

The National Retail Federation said roughly 9 percent of customers are discouraged from purchasing gift cards because they are concerned about fees and expiration dates. The mid-November survey by the organization predicts that gift card sales will fall by 6 percent compared to the same time period in 2007. Sales in 2008 are expected to be $24.9 billion compared to $26.3 billion last year.

The survey also found that 53.5 percent of respondents plan to purchase gift cards in 2008, compared to 56.6 percent in 2007. Men are expected to be the biggest gift card spenders, who may purchase an average of $156.98 on the cards.