A lot of people are left holding worthless Dick Smith gift cards as a result of that company going into receivership. This specialist electronics retailer was started by the legendary Dick Smith decades ago and was acquired by Woolworths as part of their expansion into other merchandising than just groceries. It fell on hard times and Woolies sold it to Anchor Capital Partners in 2012 for just $ 94 million. Surprisingly, it was floated on the stock exchange the next year and attracted an input of $ 520 million, but the electronics market had moved from speciality stores to the big brand discounters and eventually it was forced to close it's doors.
Having the "Dick Smith "name probably convinced many shoppers to buy it's gift cards as Christmas presents for friends and family and the fact that the stores have closed and the cards can not now be redeemed is a normal business risk. A few years previously, bookseller Angus and Robertson had a similar situation. Honouring all manner of gift cards relies on the financial strength of the retailer involved remaining solvent and so the decision to purchase is a risk that each customer makes when considering making that sort of purchase.
When gift cards first made an appearance they were a novelty way for the purchaser to avoid one of the risks of selecting a present for another person. The gift card transferred the choice of gift to the receiver and dodged the hazard of picking the wrong colour or the wrong size - or even of selecting a totally inappropriate gift. Basically, the gift card was simply money in a different form - for the receiver to spend as he or she wished at the store from which the card was issued.
For many years, gift cards were open ended. There was no time limit on their validity because the store that issued them already had the face value of the card paid into it's cash register. That was before "third parties " started issuing gift cards which could be redeemed at a variety of accepting stores. The focus changed. The money was held by the issuing company and when the voucher came into the hands of a particular store it was exchanged with this holding company for the return of the cash value.
Suddenly - these gift cards began to acquire a time limit on their validity - and this was usually twelve months. This does not seem to be sanctioned by law and it proved a bonanza for the companies issuing gift cards. Many are never presented and thus deliver the face value as a gift to the card company, and many others still have a positive credit balance when the validity term expires. There is absolutely no reason that such a term should apply. There is no term limit on the validity of banknotes - and virtually these gift cards are simply banknotes in a different form.
There is also a tendency for some retailers to impose further conditions on the use of gift cards. It is not unusual for stores to claim that gift cards can not be used to purchase items marked down for sale clearance, or ban their presentation for payment during sales conducted within strict time limits. Some stores have refused gift cards during their Boxing day sales extravaganza.
It seems that gift cards fall into a gray area as far as the law is concerned and it is time this was clearly spelt out with legislation. There is absolutely no valid reason for imposing a time limit on gift cards. There is no reason why any form of restriction should be imposed on the type of purchase that can be made. The card issuing company is simply the "third party "holding the cash paid by the gift giver, awaiting it's transfer to the store in which the gift receiver has chosen to redeem the purchase.
The only remaining risk for the buyer of gift cards is the possibility of that third party company closing it's doors and filing for bankruptcy. But then, every known commercial transaction comes with some sort of risk !
No comments:
Post a Comment