With Over Half of Upstate NY Shoppers Buying Gift Cards This Holiday Season, Schumer Warns of Gift Card Scams That Could Cost NYS Consumers Millions of Dollars
Press Release
With Over Half of Upstate NY Shoppers Buying Gift Cards This Holiday Season, Schumer Warns of Gift Card Scams That Could Cost NYS Consumers Millions of Dollars
Hidden Fees, Balances That Decrease Over Time If the Cards Aren't Used Still Attached to Commonly Purchased Gift Cards
Reports Show Whopping 27% of Gift Cards Go Unused Every Year, Costing Upstate New York $180 million, Partially Due to Current Anti-Consumer Policies
Schumer's "Fair Gift Card Act" Shields Consumers By Prohibiting Excessive Service Fees, Early Expiration Dates That Drain Gift Cards' Value
As shoppers scramble for last minute gift ideas and millions of Upstate 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 Upstate New York 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 announced that 4.5 million Upstate New Yorkers will buy between three and four gift cards this year, spending an average of $147.33. In total, Upstate New York will spend $657 million on 16.5 million cards. However, 4,457,000 cards, worth $180,719,000 will go unused, in part due to hidden fees and expiration dates.
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