/ Money

Last-minute presents: is it a risk to buy a gift card?

When a major retailer goes bust, things can quickly become complicated for gift cards. Cash may feel impersonal for a last-minute present, but is a gift card worth the risk?

The past 25 years have seen household names such as Woolworths and BHS disappear, but the rise of online marketplaces such as eBay, Amazon and Etsy means finding a diamond deal at a bargain price is not only confined to car boot sales.

And this year hasn’t been short of tumult for the high street, with four big-name retailers going into administration and others taking out company voluntary arrangements (CVA) to stay afloat.

Toys ‘R’ Us, House of Fraser, Maplin and Poundworld all went bust this year, with major department store House of Fraser the only one to be swiftly bought out of administration by Sports Direct owner Mike Ashley.

And gift cards became a hot topic as a result. Many House of Fraser customers were left wondering whether they could use their gift cards.

An anonymous shopper shares their House of Fraser experience with Which? Conversation

‘Difficult to impossible to redeem’

It’s usually anywhere from difficult to impossible to redeem gift cards and vouchers when a retailer goes into administration.

This is because your gift card purchase remains the liability of the old administration that has gone bust. It is a voluntary goodwill gesture for retailers who have gone bust to honour gift cards, and it is not common for them to offer this.

So it was a surprise to hear House of Fraser instructing its customers to send gift cards to its Baker Street office to be re-issued. While it has taken a long time to get these reissued, in recent months people have started to receive gift card replacements.

One in three Which? members we spoke to plan to buy a gift card as a Christmas present this year.

Our buying tips

Here are our handy tips for giving and receiving gift cards:

  • – Clarify with the retailer when the gift card runs out at the point of purchase
  • – Tell the recipient about the expiry date and any other important terms in person, as not all gift cards have the expiry date printed on them
  • – If you are the recipient of a gift voucher this Christmas, look at the expiry date or ask about when it expires as soon as you receive it

Are you considering buying a gift card this year? Have you ever been caught out by a gift card expiring or being rendered invalid?

Comments
Member

The only time I buy gift cards is when American Express has an offer for spending at a particular merchant. For example, in the last two months, there have been offers to get £30 back for spending £100 at Selfridges and Harvey Nichols, £5 back for spending £15 at WHSmith, £20 back for spending £50 at Café Rouge, and £45 back for spending £150 at Gaucho. American Express’s terms and conditions for these offers always say that gift cards are excluded, but that’s just to protect Amex because a minority of merchants (e.g. Eurostar) sell their gift cards and vouchers via a third party merchant which wouldn’t qualify for the offer. In practice, most merchants sell gift cards under the same merchant code as direct sales of their goods and services. It’s a great way to buy gift cards at discounts of 30% to 40%, and the optimal method is to spend exactly the offer’s minimum amount on buying a gift card.

These offers are once per merchant per offer per Amex card (and a supplementary card on the same account counts as a separate card). The most successful offer for me was Harvey Nichols, which was repeated recently, where I managed to spend £100 11 times using multiple Amex cards, i.e. a total of £1100, giving a discount of £330.

If you don’t have an American Express card, then I strongly recommend getting at least one, particularly because of these frequent offers. The frequently-heard argument that a minority of merchants don’t accept American Express doesn’t apply, because I’m talking about using it specifically at these merchants that do accept it.

Member
Patrick Taylor says:
21 December 2018

Useful information.

There is a hefty annual fee for AMEX – however the offer is complex.

Member

Patrick, you’re mistaken. Plenty of American Express cards have no annual fee. While it’s true that almost all of their charge cards, which must be repaid in full every month, have hefty annual fees with all kinds of insurance and travel benefits, most of their credit cards have no annual fee, because the costs of running the accounts is subsidised by other customers who pay interest by foolishly using credit cards as a means of borrowing instead of solely as a means of spending.

Rather than posting a referral link where I would receive free points or Avios for introducing you, I would recommend the little-known Rewards card, which I found out about at https://www.headforpoints.com/2018/10/16/american-express-rewards-credit-card-benefits/

Member
Steve Putman says:
21 December 2018

Gift cards are a no-no for me, as the risk of the recipient losing the money is too high. Best to give cash or cheque.

Member

Surely the number one buying tip for gift cards:

* Tell the recipient to spend it in full and as soon as possible!

(Forget about the expiry date – how long to you want to be exposed for?)

Member

Before the days of gift cards, gift vouchers rarely used to have expiry dates; they very reasonably remained valid indefinitely. When retailers started to issue gift cards instead of gift vouchers, retailers introduced two-year expiry terms on them, whereby the retailer gets to keep the gift card buyer’s money without redress after two years of no activity (although often checking the balance counts as activity). A contractual term that allows the retailer to keep the gift card buyer’s money, without giving any goods or services in return, lacks any objective justification. Retailers cannot argue that unspent gift vouchers cause them a cost or other problem because they receive interest on their value. Section 62(4) of the Consumer Rights Act 2015 states that “A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer”. Section 62(1) states that “An unfair term of a consumer contract is not binding on the consumer”. Therefore I would argue that such expiry dates, without any objective justification, are not binding.

I notice that Ireland and Australia are introducing a minimum expiry term for gift cards of 5 years and 3 years respectively. Isn’t it time for the UK to follow suit and go one step further by banning expiry dates on gift cards altogether. After all, the lack of expiry dates on the previous system of gift vouchers never caused a problem.