Comet row reveals insecurity of gift card credit.

The administrator’s acting on behalf of Comet may have performed a u-turn on their acceptance policy of gift cards, but perhaps not before doing some damage to the whole image of gift cards.

In the UK, more than £4bn was spent on gift cards in 2011. Whether for high street stores or online retailers, they remain a popular present when you’re simply not sure exactly what a friend or family member would like. They allow the recipient to choose something for themselves.

It should be a straightforward concept though that isn’t always the case.

Some cards are valid for in-store purchases only, while others contain a code or a scratch-off strip that reveals a code which enables the card to be used online. Previous experience has taught me that it’s even possible to buy cards in store which contain small print stating that they’re only valid for online purchases.

A number of cards have clear expiry dates although others come with no information concerning either how much credit is loaded onto the card, nor when it has to be used by. In the case of the latter, should there even be an expiration date?

When a customer purchases a card, the retailer in question receives the money there and then. Whether it’s a week, a month or a year later that a card holder makes a purchase using the credit loaded on the gift card, the fact should remain that the store has already received that money in advance.

There may be a valid argument for suggesting that credit not used up in five or ten years is no longer valid, but as long as the store still exists, there should be no reason whatsoever for including terms which allow the gift card credit to expire.

Surely any funds raised from the sales of gift cards could be kept separate from money raised through direct cash sales? It seems almost too simple to suggest, but would still benefit retailers because of the amount which they could make through interest whilst the money is in their bank account.

What seems completely unacceptable to me is that having received the money already, retailers can simply write it off after, say, a year’s time if it hasn’t been redeemed.

I had this experience with Amazon some years ago. After being given the generous Christmas gift of £100.00 from an employer, I noticed in the terms that it had to be redeemed within a year. It wasn’t clear whether that referred to the entire amount, or whether the code simply needed to be entered once in order to link the gift card with my Amazon account.

As the year came to an end, most had been spent, though not all. The remaining money – around £27 – was in my account balance. Surely Amazon couldn’t simply wipe that off?

Well, they could. And they did.

It was a lesson learnt and obviously I wouldn’t let it happen again. But that doesn’t change my view that it’s not only wrong, but completely unnecessary for companies such as Amazon or Comet to adopt such an approach to customers.

Time will tell whether the high-profile publicity generated by Comet will cause any lasting damage to the sale of gift cards, but the story is a stark reminder that when retailers’ terms and conditions state that the offer “can be withdrawn at any time”, they really mean it.

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