Pitfalls
It has been argued that holiday giving destroys value due to mismatching gifts. The most efficient way to keep value in gifting would be to give cash, however this is socially acceptable only within limits. Gift cards, to a degree, may overcome this problem but have certain pitfalls. Some feel that the absence of the thought of selecting a specific gift makes a gift card a worse choice than a poorly executed but individual gift. New products in the gift card industry are evolving to tackle this "impersonal" pitfall of gift cards. New services launched by some service providers allows for customization and personalization of gift cards.
Gift cards have been criticized for the ability of the issuing authority to set rules that are detrimental to the consumer. Thus the recipient may have to face expiration dates, administrative fees, restrictions in use, and absence of adequate protection in case of fraud or loss. Over time the value of a gift card may become zero. However, these issues have diminished significantly in recent years. Many states have enacted laws limiting or prohibiting all fees or expiration dates for gift cards. Further, because of the negative impact on sales that such policies can have, most merchants have adopted and even advertise a "no fee, no expiration" policy for their gift cards, whether or not state laws require it. In 2011, an estimated 2.5% of gift cards imposed an expiration date and 2.7% imposed post sale fees.
A quarter of gift card recipients still haven't spent gift cards a year after receiving them, according to a Consumer Reports survey. And a majority of people say they end up spending more than the value of the card once they get to the store.
Gift cards are considered unsecured debt by bankruptcy courts, and as such can become valueless when a company files for Chapter 11 reorganization, although companies work hard to avoid such cases if they expect to remain in business. Unless the company intends to liquidate, the value of gift cards is often preserved in bankruptcy.
Read more about this topic: Gift Card
Famous quotes containing the word pitfalls:
“Because relationships are a primary source of self-esteem for girls and women, daughters need to know they will not lose our love if they speak up for what they want to tell us how they feel about things. . . . Teaching girls to make specific requests, rather than being indirect and agreeable, will help them avoid the pitfalls of having to be manipulative and calculating to get what they want.”
—Jeanne Elium (20th century)