With Over Half of WNY Shoppers Buying Gift Cards This Season, Schumer Warns of Gift Card Scams that Could Cost Buffalo Area Shoppers Hundreds of Dollars This Holiday Season

Press Release

WITH OVER HALF OF WNY SHOPPERS BUYING GIFT CARDS THIS SEASON, SCHUMER WARNS OF GIFT CARD SCAMS THAT COULD COST BUFFALO AREA SHOPPERS HUNDREDS OF DOLLARS THIS HOLIDAY SEASON

Hidden Fees, Balances That Decrease Over Time If the Cards Aren't Used Still Attached to Commonly Purchased Gift Cards

Bill Comes on Heels of New Report Showing Whopping Nearly 30% of Gift Cards Go Unused Every Year, Partially Due to Current Anti-Consumer Policies

Schumer's "Fair Gift Card Act" Shields Consumers By Prohibiting Excessive Service Fees, Early Expiration Dat

As shopping days dwindle and thousands of Western New York consumers head out to buy holiday gift cards, U.S. Senator Charles Schumer today unveiled his "Fair Gift Card Act" to protect millions of American consumers from unreasonable expiration dates and fees that routinely drain gift cards' value. Though gift cards are popular gifts, studies have shown that 27% of gift cards bought during the holiday season go unused, due in part to the cumbersome expiration dates and fees that chisel away at cards' value, depriving consumers of purchasing power. Many stores also saddle the cards with hidden fees and sneaky clauses that draw down the balance. Schumer's bill will aid consumers by prohibiting excessive fees, and ensuring that all cards remain valid for at least five years.

"It used to be that searching for the latest doll or game was the biggest challenge for shoppers during the holidays, but now with trickier fees and restrictions appearing every day on gift cards, the new challenge is reading the fine print," Schumer said. "This may be the season of sharing, but under current policies, the only present shoppers may be giving is a useless piece of plastic with a bow. The Fair Gift Card Act will ensure that gift cards serve their purpose: to allow recipients to spend the full value at the store whenever it is convenient for them."

Gift card sales have been brisk in recent years, and although sales are expected to decline this year, they will still account for a staggering $88.4 billion in sales. Yet despite gift cards' popularity, a report by the TowerGroup indicates that $6.4 billion of the $88.4 billion spent on gift cards this year will never be redeemed. These unused cards equal free money for banks and retailers, who often take service and dormancy fees from inactive gift cards, charge monthly maintenance fees, and recoup the value of an unused gift card after it expires, sometimes in as little as six months or a year. As a result of these fees, consumers may lose $2 or more a month from their cards, or lose the entire value if not used quickly enough.

Even those cards that are eventually redeemed may not be at full retail value by the time a consumer uses the card due to dormancy or monthly fees. According to a study published in Consumer Reports in 2007, up to 27% of gift cards purchased in 2006 had yet to be used a year later, up from 19% at this time in 2005. Of those surveyed, over half said they didn't have the time to use their card, one-third hadn't used the card because they hadn't found anything they wanted and another third forgot about their gift cards. However, a startling seven percent of those surveyed had not yet redeemed their gift because the card had been either lost or it had expired.

With 54% of consumers reporting that they are planning to buy gift cards this season, Schumer released the following report on potential county gift card sales this holiday season: In Erie, approximately 493,200 residents are planning to purchase gift cards for the holidays; 43,250 in Cattaraugus; 72,330 in Chautauqua, and 116,000 in Niagara. In total, over 724,000 Western New York residents will be purchasing gift cards in the next few weeks.

In order to protect gift card purchasers and recipients, Schumer announced today that he will introduce the "Fair Gift Card Act" to end exorbitant fees and burdensome expiration dates. The bill helps consumers retain the value of their gift cards by prohibiting gift card issuers from imposing a dormancy or service fee, unless the gift card has less than $5 remaining on it after 24 consecutive months of inactivity and the fee does not exceed $1 per month. In addition, the bill requires that gift cards remain valid for at least five years.

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