The great gift vouchers rip off

elkringo

In the run up to Christmas, it's worth reminding everyone what a rip off gift vouchers really are. Irish lawmakers have patently failed to protect consumers, therefore consumers must protect themselves.

Here's some facts to consider before buying a gift voucher:

- if there is an expiry date, and this date has passed, the shop is fully entitled to refuse to honour the voucher. In this case, you lose the entire value of the voucher. Some vouchers have expiry dates of as little as 1 month. Very few last longer than a year.
- If the shop changes ownership or closes down, the card voucher is worthless (e.g. HMV).
- Some vouchers cost money to redeem, or reduce in value over time (e.g. the One4All gift voucher has a fee €2 for first voucher).
- You do not have a right to get change in cash if you only partially use the voucher. This the equivalent of you handing cash over to a shopkeep, and then they refuse to give you any change. Another word is theft (though bizarrely, it is legal).
- The merchant imposes their own rules on the voucher, which are invariably in their interest and designed to ensure they get the full value without providing the goods or service advertised.
- Merchants get the money for free, without having to provide any goods or service for an indefinite amount of time. You're effectively giving the merchant a free loan, or free cash if the voucher is never redeemed.

It is estimated about 20% of gift voucher value is never redeemed.

I would urge consumers not to waste money on gift vouchers. Instead, I suggest the following: if you'd like to buy someone a gift for a shop or hotel, print out a page with that merchant logo, and details like address etc. Then attach cash in the amount you'd like give to the recipient.

This has the following benefits for the recipient:

- cash never expires
- the recipient can get change back for the unspent portion of the "voucher"
- the recipient can change their mind and spend it elsewhere
- the recipient can put cash in a saving account and get interest, until ready to spend it

If you must buy a gift voucher, always read the terms and conditions. Also, pay with a credit card if possible, so if the shop goes out of business, you may be able to recover the amount spent through the chargeback process.

*** Those interested in seeing gift vouchers properly regulated, please read on .....

Anyone interested in forming a campaign to get the government to regulate this form of legal theft, please get in contact. Some more thoughts on this ...

In my view, gift vouchers should be banned outright. Goods or services should only be paid for on or about the time they are actually received. However, if this is not possible, then the next best thing is to introduce legislation to try to protect consumers. This would have the following laws:

- Ban expiry dates. Vouchers are valid indefinitely, or at least for a minimum period, at least 5 years in my view.
- Gift vouchers are redeemable for cash, either when used partially or in full

There is no specific consumer legislation or regulations governing gift vouchers. That means that whatever terms and conditions the shop imposes on the use of the voucher is what you are agreeing to adhere to when you buy it. Many people are not conscience of the stringent conditions when buying gift vouchers, even less so the recipients.

Labour Senator Brendan Ryan introduced a gift vouchers bill (Consumer Protection (Gift Vouchers) Bill 2009) in the Seanad, but it was never passed. I assume based on pressure from vested business interests.

The proposal planned to outlaw certain practices and aims to regulate the terms and conditions relating to the sale of gift vouchers. Under the Bill it would "be prohibited to sell or offer for sale, a gift voucher with a redemption period of less than five years. The net effect will be that all vouchers will remain valid for five years at least, following the passing of this Bill."

I would urge the government to reexamine this legislation again and expedite introduction.

eamonnq

elkringo wrote: »

but it was never passed. I assume based on pressure from vested business interests.

Bit of a leap there.

WildCardDoW

Obviously it suits retailers to offer gift vouchers and cash makes more sense but:

- You do not have a right to get change in cash if you only partially use the voucher. This the equivalent of you handing cash over to a shopkeep, and then they refuse to give you any change. Another word is theft (though bizarrely, it is legal).

I have never come across a retailer that doesn't leave the remainder on the card, back in the day of paper vouchers if it was below a certain amount it was given in change in most places I used vouchers.


Also used to work in Smyths, when we had paper vouchers staff used to ignore the use by date (which were set to expire roughly five years after purchase) and we used to accept expired €5 software vouchers.

Some retailers are good, some retailers are bad. Go figure.

Absolam

elkringo wrote: »

- The merchant imposes their own rules on the voucher, which are invariably in their interest and designed to ensure they get the full value without providing the goods or service advertised.

Even bigger leap there. Accusing every merchant who sells gift vouchers of attempting fraud seems..... strong?

dudara

@elkringo Can you please explain your interest in this topic? Right now it appears like soapboxing with a vested interest.

dudara

elkringo

Thanks all for the great discussion.

My interest stems from the fact that I received a gift voucher for €400 last christmas. I went to redeem this in September, and was informed that as it only had a 6 month expiry no can do. In the end, I managed talked to merchant into giving me value for *half* the voucher, but this was only grudgingly granted.

To answer WildCardDoW, I'm not suggesting that the value is lost, only that it remains on the voucher - why not redeem for cash? Invariably to use the remaining value, the customer is forced to spend over and above the value i.e. you must purchase goods over the value of the voucher.

I'm not saying that merchants are fraudsters, I agree with Absolam this is too strong a word (I don't think I used the work fraud, did I?). Many merchant are fair and will honour expired vouchers. But many won't, and why should they have all the say? It's always the consumer who loses out.

Finally, to eamonnq, I say "qui bono"? I think my assumption was fair.

FYI, other countries have legislated for this e.g. Ontario, Canada:
http://www.sse.gov.on.ca/mcs/en/Pages/Gift_Cards.aspx

eamonnq

elkringo wrote: »

Finally, to eamonnq, I say "qui bono"? I think my assumption was fair.

'Cui bono' ?

Absolam

elkringo wrote: »

I'm not saying that merchants are fraudsters, I agree with Absolam this is too strong a word (I don't think I used the work fraud, did I?). Many merchant are fair and will honour expired vouchers. But many won't, and why should they have all the say? It's always the consumer who loses out.

You said that merchants impose rules designed to ensure they get the full value without providing the goods or service advertised. Purposefully taking money for goods or services with the express intent of not providing those goods or services is fraud. Or theft. I think you're levelling an exceptionally broad accusation there against merchants who are simply providing a service that consumers request.

eamonnq

elkringo wrote: »

Finally, to eamonnq, I say "qui bono"? I think my assumption was fair.

FYI, other countries have legislated for this e.g. Ontario, Canada:
http://www.sse.gov.on.ca/mcs/en/Pages/Gift_Cards.aspx

Was it not a problem with EU law ?

Any other EU countries have this sort of legislation ?

elkringo

Absolam - Merchants know that on average about 20% of gift card value goes unclaimed i.e. they will not have to provide goods or services for that 20%. This is booked as pure profit. This may be a product of consumer behaviour, but you must agree is not a situation that would arise with cash. I never used the term fraud, but if that's the term you'd like to use for the situation above, then that's certainly your perogative.

eamonnq - yes, the term is "cui bono" - thanks for correction! Not sure about EU legislation, I must investigate.

Cabaal

where's the consumer issue exactly? Might as well post this in ripp of Ireland...more suited there :pac:

ScouseMouse

Cabaal wrote: »

where's the consumer issue exactly? Might as well post this in ripp of Ireland...more suited there :pac:

I think dudara mentioned that earlier....

dudara

I have no problem with this thread - we do get questions regularly on gift vouchers. Given the closure last year of HMV and of AWear this year, it's a relevant topic.

dubstarr

My interest stems from the fact that I received a gift voucher for €400 last christmas. I went to redeem this in September, and was informed that as it only had a 6 month expiry no can do. In the end, I managed talked to merchant into giving me value for *half* the voucher, but this was only grudgingly granted.
To be fair thats up to you to find out how long they last.Its usually printed on the back,so on that score that was your fault.

coylemj

When a merchant sells a gift voucher, it is accounted for in the books as a loan from the consumer to the retailer and has no effect on profit and loss i.e. it is initially a financially neutral transaction. The value of the transaction from the retailer's perspective is that when the holder of the voucher decides to spend it, he/she must spend the value in that retail store. However if the holder puts the voucher in a drawer and forgets about it, the amount of money would stay on the balance sheet forever as a debt and accrue no benefit to the retailer so the majority of retailers apply an expiration date in an attempt to force the people holding vouchers to spend them. If some people let the vouchers expire then that is hard luck but if it's clearly stated in the Ts & Cs then that's just tough.

Bepolite

The problem I have with them is that people still buy them. If there wasn't the demand retailers wouldn't offer them. I agree wholeheartedly with the OP there should be legislation introduced, ideally along the line of retailers having to use a third party company to guarantee the value, and a six year time limit on use.

Obviously the simpler solution if for people to just stop buying the stupid bloody things. Honestly I don't get them: You are exchanging money for something that expires and can only be used in one place. Does that not strike the majority of people as just plain stupid?

Surely it's better to just make sure someone has a gift policy and buy someone something and give them a gift receipt?

elkringo

Thanks all again for your candid views.

While we all accept that it is incumbent for the owner of the gift card to cash in before the expiry, it should also be acknowledged that the recipient of a gift card was not the person who accepted the expiry date in the first place (that was the purchaser). In my view, a gift card is the equivalent of cash. After all, hard cash was use to purchase it. I've yet to see an expiry date on a 10 or 20 euro note.

As for the accounting rules, that's nothing to do with the consumer. In practice even if the merchant must carry this on their books as a liability, they still have the use of this money as an interest fee loan, either to deposit or use as working capital for their business.

In conclusion, I would still urge people to not use gift cards this Christmas. If you must, know what you're signing up for. If you care enough for someone to buy them a gift in the first place, give them cash (accompanied by a note of its intended purpose) which has none of the restrictions of gift cards - and never expires!

galwayjohn89

I really fail to see the issue. I receive loads of gift cards and always check the expiry date. I have never lost a penny to fees before and prefer to receive them then cash. If I receive cash I feel like I should save it or put it towards day to day expense. But with a gift card I sort of have to buy something nice for myself. (I know it's not logical but thats how I feel)

I don't think people understand the cost of providing a scheme such as one4all or the book voucher.

elkringo

Good tips for how to protect yourself against losses due to gift cards:

http://www.consumerhelp.ie/gift-vouchers

Also, timely article in today's Times. I think this aptly demonstrates the scale of losses for consumers:

http://www.irishtimes.com/news/consumer/almost-half-of-consumers-let-gift-vouchers-go-out-of-date-1.1617125


Vuzuggu - I admire your diligence in checking expiry dates etc. However, as demonstrated by the article above, not everyone is as careful. As for the cost of operating these schemes - I really don't care; I only care about the losses incurred by consumers of these cards. I'm sure one4all make a tidy profit, otherwise they wouldn't operate this business in the first place.

kennethsmyth

In fairness lads, the customer has to take some accountability for their actions (ie using the vouchers within the time period). A fair time period is 2 years not 5 or 6. I understand some of the arguments that the accounting proceedure has nothing to do with the customer but actually it does - no company can keep a liability on there balance sheet forever, in fact if they did companies would run into liquidity problems and would be forced to close as per their accounts they would be insolvent. 2 years is plenty or even 2 years from last movement on the voucher (even a balance check).

By the way a voucher is not cash, if it were it would be called cash. In other words the customer whether they are the buyer or receiver of the voucher understands this - i get the feeling the op just wants all things to lean their way. The customer must be responsible also.

galwayjohn89

elkringo wrote: »

Vuzuggu - I admire your diligence in checking expiry dates etc. However, as demonstrated by the article above, not everyone is as careful. As for the cost of operating these schemes - I really don't care; I only care about the losses incurred by consumers of these cards. I'm sure one4all make a tidy profit, otherwise they wouldn't operate this business in the first place.

Well that is the customers own fault. As long as the fees are clearly stated I fail to see what customers need to be protected. Customers need to start taking responsibility for what they do and stop demanding to be spoonfed.

Bepolite

Vuzuggu wrote: »

Well that is the customers own fault. As long as the fees are clearly stated I fail to see what customers need to be protected. Customers need to start taking responsibility for what they do and stop demanding to be spoonfed.

I'm sorry but that's an over simplistic view. Consumers require protection because there is not parity in the transaction and different people have different abilities to negotiate.

Contract law has it's genesis in exchanging groats for turnips, all face to face with the terms individually negotiated. That's simply not the world we now live in. When you enter into a retail contract there are all sorts of T&Cs attempting to limit liability and it's only because legislation is there to prevent this that consumers are not screwed.

The market is a great force, take car warranties, 5 years unlimited mileage is now not uncommon. That's great and the market is primarily responsible. However if legislation was not in place they'd all just say 'Sold as is thanks' and leave it at that. A classic example of this is retailers trying to weasel out after 1 year because it's not worth suing over a €300 net book, where it is over a car.

Sure if you're buying tomatoes off a guy on Moore Street it's all well and good to apply a bit of caveat emptor. When you're dealing with a large company, especially in uncertain times, legislation is needed.

elkringo

Good information about expiries and balance policys on a number of gift cards:

http://www.consumerhelp.ie/voucher-expiry

ScottSF

One reason gift cards should not be exchangeable for cash (even for what is left after purchase) is that some gift cards are sold at a discount. So for example you get 100 EUR in spending for 80 EUR (20% off). That is a one way retailers can offer a discount on goods to be purchased in the future. I've seen many restaurants offer this for the holidays.

While a few legal requirements should be established, I still feel it is up to the purchaser and recipient to understand the usage rules in full. I realize most of us are busy but if you get 100 EUR to spend at a local shop, why not spend it right away? If it is indeed meant as a gift (Birthday, Christmas, etc...) then the gift giver would EXPECT you to spend it promptly right?

moxin

Rule is to never get a voucher that has its use for just one shop as we know they could close in the future(HMV).

I've often purchased vouchers\gift cards but only for an entire shopping centre(:D) as the whole shopping centre is not going to close! In Dublin i've purchased gift cards from Jervis and Blanch centres, it lessens the risk of defunct vouchers greatly while giving the recipient a greater choice of shops to spend it in. I've always made sure they state the expiry date so I can pass that onto to the recipient.

elkringo

Delighted to see that the government has finally legislated for this area

https://www.ccpc.ie/consumers/shopping/gift-vouchers/

kennethsmyth

elkringo wrote: »

Delighted to see that the government has finally legislated for this area

https://www.ccpc.ie/consumers/shopping/gift-vouchers/

Just be careful guys, this is legislation for "gift vouchers/cards". One4all and dundrum cards etc. are actually "Money Cards" and come under banking type legislation.

Essentially they are anonymous debit cards and hence there has been anti-money laundering legislation introduced on them regarding amounts redeemable (50eur card not present and 150eur card present).

These cards are not covered by the gift card legislation.