Buying Christmas presents too often starts as a hassle and escalates into a rushed, crowded nightmare.
Little wonder so many of us resort to gift cards – the shoppers’ Yuletide saviour.
But, this year, nothing is easy.
Shoppers are being warned to consider the health of the companies issuing gift cards after UK company Topshop said customers with gift cards would only be allowed to use them to cover half the price of their purchase.
CHOICE head of policy and government relations Julia Stewart told The New Daily that when a company hit financial trouble, consumers came last.
“Within any voluntary administration, consumers typically are at the bottom,” she said. “They obviously come behind creditors and those people who have invested their money in that particular company.”
Ms Stewart said customers should research the retailer’s recent history to minimise the chances of purchasing potentially “dead money”.
“We just really encourage people to do their research, so have a look at the company to make an informed choice, and even consider smaller companies and initiatives like Buy From The Bush,” Ms Stewart said.
UK website thisismoney.co.uk reports that gift vouchers and gift cards become “redundant” should the issuing firm collapse. With Britain in the grip of COVID restrictions, and non-essential retailers being closed, gift cards have gone digital and are being emailed to recipients. The lack of access to shops mean gift cards are more important than ever.
But they might be a waste of money.
Richard Lim, chief executive of Retail Economics, said that if consumers bought a gift card from a retailer that fell into administration, they would not be accepted and became worthless.
“It is about weighing the risk and it is a small risk if you choose the store carefully.
“However, if you have a gift card with a retailer that is going through issues, it would be sensible to spend your gift card as quickly as possible.”
Adam French, Which? consumer rights expert, added: “This year, you need to carefully consider whether it is a good option because when a business enters administration, gift cards often become worthless.
“If you are still considering buying a gift card this Christmas, it is perhaps worth purchasing one that can be used in multiple stores so there are other options should one go bust.”
According to the ACCC, gift card holders may become ‘unsecured creditors’ during administrations if they have not redeemed their card’s value, The New Daily reports.
“And if a business changes hands, gift cards are honoured if it was sold as a ‘going concern’ – where the businesses’ assets and liabilities are sold by the old owner to the new owner – and the new owner buys shares in the company.”
Many recent business collapses in Australia have been in the fashion sector. Retail Doctor CEO Brian Walker said home improvement and furnishing retailers were more secure. He advised consumers to pay attention to gift card terms and conditions as some may contain “exclusions against marketing promotions or customer loyalty programs”.
“Understand (that) while it represents a currency, there may be terms to that transaction that are restrictive, and make sure to deal with reputable and well-regarded businesses,” Mr Walker told The New Daily.
“And if you are worried a retailer may go under, purchasing a card from a shopping centre chain or one that covers a number of participating retailers could be a good way to hedge their bets.”
Queensland police remind us to be wary of online gift card offers at this time of year.
“Be very sceptical of organisations offering unsolicited free gift cards or coupons online, including on social media.
“There are numerous versions of fake gift card promotions, all of which involve scammers trying to steal personal or financial details.
“As with all online scams, a good rule of thumb is to never click on or respond to an unsolicited message that feels too good to be true.”
For inspiration, see Pedestrian.tv’s 13 gift card Christmas ideas.
Do you use gift cards at Christmas? Are you more likely to shop online this Christmas?
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