23 January 2017
Gift card expiry dates need to be scrapped
Gift cards have long been a great present for people who you just can't find the right gift. Cynics will say that they're a cop out - a failure to come up with proper gift idea. But surely credit to spend at your favourite store is better than a present that you didn't really want. And in terms of thoughtfulness (because it's the thought that counts, right), it does at least show an effort to select the kind of gift that you might like.
I know my nephews like games and music but their tastes move on too quickly for me to keep up. But if I buy them an itunes card, I know that they can choose whichever game or music they want. They can even add some of their own money - and buy that new game which may have been outside of their budget had it not been for the headstart my gift card made them.
Anyway, I'm not here to sell you the merits of gift cards. The fact is, millions of gift cards are bought ever year - and I can't see that stopping any time soon.
The problem is, however, that not all retailers abide with the spirit of giving when it comes to their gift cards. The vast majority of vouchers and gift cards have expiry dates, which means that if the recipient of your gift doesn't use their credit before the deadline, it evaporates entirely.
To add insult to injury, most retailers don't print these expiry dates on the cards - and are less than forthcoming about the conditions when the gift giver buys them.
So millions of people find out the hard way - when they dig their gift vouchers out of the drawer, take them down the shop and find out that they're no longer worth anything.
At Fairer Finance, we've started collating a list of the worst offenders. This morning, we uncovered the worst yet. Ocado - the online grocery retailer - has an expiry date on its gift vouchers of just eight weeks. So if you don't spend your gift immediately, there's every chance that by the time you remember you had it, it's out of date.
Harvey Nichols still has expiry dates of 6 months on its gift vouchers - although it claims to be extending this. And Love2Shop - one of the gift cards that can be used at dozens of different retailers, is one of many cards that expire after a year.
In the case of Love2shop, it's impossible to find the expiry date when you're buying the card. The website simply says that it will be printed on the front. So it gets a point for helping recipients - but nul points for transparency at the purchase end.
Hamleys, JD Sports, Pizza Hut, Westfield, TopMan, Ryanair, Ted Baker are amongst the many retailers that have a one year expiry. Most now have two years - but even that is not particularly long.
The arguments in favour of expiry dates are incredibly weak. Retailers say that they need to have expiry dates for accounting purposes - so they don't have an unlimited liability sitting on their books. But prioritising accounting neatness over customer fairness doesn't say much for the ethics of a business.
When it comes to gift cards, the customer bears all the risk. The money is already sitting in the coffers of the retailer, and there is no protection for theft, inflation or insolvency.
Furthermore, the likelihood of a gift card being spent more than two years after it's been issued must be very small.
If by some miracle, a customer finds a £50 gift card at the bottom of his man drawer - 10 years after he was given it - there's no good reason why the shop shouldn't honour it. It won't buy him nearly as much as it would have if he'd spent it when he received it - and the store will have had the benefit of his cash in its tills for 10 years. But whatever value is left should be his to spend.
Reports last year suggest the government has been gently leaning on retailers to increase expiry dates to a minimum of two years. But my worry here is that 2 years then becomes the norm. If the government isn't willing to legislate with a minimum expiry, then it should be encouraging retailers to scrap expiry dates altogether. A nudge to have a minimum expiry of two years limits the ambition of the sector.
Personally, I think legislation should be seriously considered - and while they're at it, ministers could look at protection for gift card holders when companies go bust.
As it stands, gift card holders have no protection when a company goes into administration. The company can choose to continue accepting gift cards, or can decide not to. And if a company ends up being liquidated, the gift card holders end up at the bottom of the queue with all the other ordinary creditors.
Given that the cash is already in the company's tills, and consumers lose out day by day as inflation erodes the value of their gift, gift card holders should be given preferential creditor status, meaning they are the first to receive their money back if the company goes bust.
Don't hold your breath, however. Consumer affairs appears to be bottom of this government's agenda. We've struggled to get anything more than form letters back from Margot James MP - who holds the portfolio for consumer affairs. And there's been nothing new on the slate from her department since Theresa May took office last summer.
So in the meantime, if you're sitting on a gift card, put down your paper, or phone or tablet right now - and check when it expires. Then get yourself down the shops to use it.
Read more related articles
9 December 2016
Airlines finally getting the message on credit card charges
Fairer Finance's Red Card For Card Charges campaign is gaining momentum with two more major airlines scrapping their card charges
22 June 2016
Customs charges on your birthday presents - a Royal rip-off
How Royal Mail and HMRC work together to ruin people's birthdays.
30 January 2017
Comparison sites unfairly cashing in on life insurance commissions
The largest comparison sites are taking commissions of hundreds, sometimes thousands of pounds, for selling a life insurance policy.