- The Washington Times - Thursday, November 20, 2003

Gift-card recipients beware: Restrictions might apply on those convenient alternatives to paper gift certificates.

With a growing number of gift cards expected to be stocking stuffers this Christmas, more consumers might run the risk of losing out if they don’t read the fine print.

Retailers have varying gift-card policies, according to the National Retail Federation (NRF). Some stores’ gift cards expire after a certain time — usually after 12 months or more — and other cards depreciate each month after the card hasn’t been used for a certain period of time.

Consumers are expected to spend about $17 billion on gift cards this season, which would account for nearly 8 percent of all holiday sales, according to the NRF’s first gift-card survey released yesterday.

The survey, conducted from Nov. 6 to 12, found that nearly 70 percent of consumers plan to buy gift cards this holiday season.

“Gift cards are a great selection for the person who has everything,” said Tracy Mullin, federation president and chief executive. “They are more convenient than the gift certificates of years’ past, and they’re no longer considered the ‘lazy man’s gift’ — people love to get them.”

Nearly 50 percent of consumers in an earlier NRF holiday survey said they would like to receive gift cards this year — up from about 41 percent last year.

However, those who receive the gift cards must pay attention to restrictions:

• Wal-Mart deducts a $1 service fee from its gift card after 24 months of nonuse. The card does not have an expiration date.

• Sears, Roebuck and Co.’s gift cards expire two years from the date issued except in California, Massachusetts and New Hampshire.

• Mall owner Simon Property Group Inc. has a $2.50 monthly fee deducted from its Bank of America-issued Visa gift cards after the first six months from issuance. The card expires on the date on the card.

The retail federation says the service fees are often a result of retailers using third-party companies to process and maintain their gift-card systems. The third-party companies usually charge the retailers for inactivity on the cards, which retailers pass on to consumers who are not using them.

Visa research shows most gift-card recipients spend the entire balance within the first three months of receiving the cards so the fees wouldn’t affect them.

Some retailers, such as Target Stores and J.C. Penney Co. Inc., do not deduct fees if shoppers don’t use their gift cards. J.C. Penney stopped its charging policy in April.

“Gift cards are really a customer service and not necessarily a huge revenue for retailers,” said Christi Byrd Smith, a spokeswoman for the department-store chain. “It was in the best interest of our customer [to eliminate the service fee].”

J.C. Penney, which began offering gift cards in summer 1999, used to deduct a $1-per-month fee after 24 months of nonuse.

The company’s research found that when consumers use their gift card, “the vast majority” spend more than the value of the card.

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