$75M in Gift Cards Could Become Worthless

[RonHack]

I bumped into this while browsing some stuff:

http://www6.comcast.net/news/articles/finance/2008/03/06/Gift.Cards/

<snip>
$75M in Gift Cards Could Become Worthless

ANNE D'INNOCENZIO, The Associated Press
10 hours ago

NEW YORK -- You know that Sharper Image gift card you got for Christmas? Right now, it's worthless. And other gift cards in your wallet could lose their value, too.

As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year.

"If I knew this was going to happen, I would have used them right away," said Jon Tapper, a public relations executive from Boston who received two Sharper Image cards as business gifts just a few weeks ago. Their total face value is $50.

"I love gift cards, but now this makes me think twice."

The Sharper Image announced late last month that it was suspending the acceptance of gift cards, at least temporarily. It urged shoppers to check the company Web site later this month for an update. That is typical of businesses that reorganize under Chapter 11 bankruptcy, which treats gift cards as a loan to the company, not as cash.

For many shoppers, it's a harsh lesson about the risks of gift cards. Consumers spent an estimated $26.3 billion in gift cards at retailers alone last holiday season, compared with $24.8 billion in 2006 and $18.48 billion in 2005, according to the National Retail Federation.

C. Britt Beemer, chairman of America's Research Group, says "you will see a lot of frustration among customers. You basically stole (money) out of the customers' pocket. They will never forgive you."

<paste>
-------------------

Ah, nothing like this bit of news to keep the economic (Recession, maybe Depression) engine going.

[DainBramaged]

1. Sharper image was overpriced and full of crappy products

Their Ionic Breeze air cleaners broke days after they were out of warranty.

[tech3149]

2. That's the plan Dan

You don't build the best or most reliable product as a manufacturer, that'll cut your throat on future sales. As a retailer, you sell the stuff that has the best hype value or gets you the highest profit margin. Who gives a shit if it actually works or is worth what you paid for it? Sure ain't the retailer, they're just sayin' I got your green cause you gave it to me. Would you complain if someone stopped you on the street to offer you $10 for that $1 umbrella you bought from the street vendor?

[DainBramaged]

3. What?

So you'd buy Chinese or Indian cars because they are cheap and shitty?

[aquart]

4. Then maybe you ought to deal with smaller, local people.

Whose only way to compete is better customer relations.