With Toys 'R' Us announcing its closure, Better Business Bureau is sharing advice on what to do with gift cards for closing stores.
BBB's Veronica Craker says under normal circumstances, gift cards are valid for years, or indefinitely.
"The FTC regulations from 2010 declared that money on a gift card can’t expire for at least five years. However, the situation changes when a business declares bankruptcy. When a store files for bankruptcy, payments are frozen and creditors must file claims in order to get paid. Unfortunately, gift card holders could find themselves out of luck or with limited options," Craker said.
So what happens if a customer is unaware a store is closing? Craker says it’s important to remember that when you buy a gift card, you are essentially giving the company a loan until you redeem the value.
"If you miss the deadline to redeem a gift card, you can file a claim for the value of the card. However, these claims are processed behind the company’s major creditors. That means you may not be reimbursed at all. So if you do have a gift card it’s best not to hold on to it for too long. And if you hear news about a company preparing to file for bankruptcy, use your gift cards immediately," Craker added.
BBB also advises keeping a few things in mind before buying gift cards to begin with.
- Look into the retailer’s financial condition. If news articles report that a company is on shaky ground, it might be best to purchase a gift card from another retailer.
- Check the terms and conditions. A gift card’s terms may allow the card to be used at another business location, or sister company.
- Purchase gift cards with a credit card, if possible. Your credit card company may be able to help recover money lost if a business goes under. Some retailers, however, require gift cards to be purchased with cash.
For more information and resources, visit www.bbb.org.
