Time Is Running Out to Use Gift Cards From Bankrupt Companies
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How urgent is it to use gift cards from retailers that filed bankruptcy during the pandemic?
Here's your money briefing for Thursday, June 11th. I'm J.R. Whalen for The Wall Street Journal. A gift card is often the perfect thing to give for a birthday or holiday. But with a lot of stores going out of business during the pandemic, the clock is ticking to use them.
It is up to the retailer to decide how long they think they should be accepting those gift cards, especially if that retailer is going into bankruptcy because they plan to liquidate their business. Oftentimes it may be 30 days. Sometimes there have been 15 days.
Bankrupt retailers could pocket millions of dollars in unused gift cards, but are they required to honor them even in bankruptcy? And can consumers collect the value of a gift card once a store goes out of business? Our reporter Aisha Al-Muslim will have answers in a moment.
Several big-name stores have filed for bankruptcy during the pandemic.
How many gift cards go unused annually and why does that matter?
If you've got a gift card from a retailer that's closing its doors, time might be running out to use it. Our reporter Aisha Al-Muslim joins us now to discuss what options consumers have. So Aisha, how many gift cards typically go unused each year?
About two to four billion dollars in gift cards go unused every year in the United States. That would be about 4% of gift cards sold every year that are not used.
Wow, that's a lot of uncollected merchandise that consumers have, you know, theoretically paid for.
it's a lot that consumers pay for and don't use. I mean, there's various reasons why they don't, you know, sometimes you get a gift card, you put it away, you forget about it, you lose it. Uh, somebody else finds it, you know, because somebody buys it as a gift. It doesn't mean that it ends up with that person or that they may end up actually going out and using it right away. And they just forget. I mean, I talked to one person who had a gift card since she got married and in 2016 and just never thought about using it until she heard that Pier 1 filed for bankruptcy.
Yeah, Pier 1 is one of many big brands that has sought bankruptcy protection. Are there different guidelines for consumers who have outstanding gift cards?
The guidelines really vary and it is up to the retailer.
How do retailers decide gift card acceptance timelines after declaring bankruptcy?
Once they go into bankruptcy, it is up to them to decide how long they think they should be accepting those gift cards. Especially if that retailer is going into bankruptcy because they plan to liquidate their business, then the timeline and the clock just starts ticking. And oftentimes it may be 30 days, sometimes there've been 15 days. And so people have to really act quickly to use their cards. Otherwise, there isn't much recourse.
Now, what are the rules for companies in bankruptcy in terms of honoring gift cards?
For example, Pier 1 is giving people about 30 days to use their gift cards after stores reopen. As you know, some stores shut down because of the coronavirus pandemic and some restrictions when it comes to non-essential retailing. But Pier 1 is also giving people more time to shop online. When I say more time, that's more than the 30 days compared to when stores reopen. And another retailer like Stage Stores, they're giving people about 30 days from when a store is reopened for the same reason. to use those gift cards.
How do liquidation cases like Pier 1 or Stage Stores handle gift card expiration and online shopping?
Now, state stores are a little bit different from Pier 1 in that state stores has no online presence, no e-commerce. So people can't shop on their website. You can see what stores they can go to and see which ones are open, but they cannot shop there. And then, of course, there's others that filed for bankruptcy like JCPenney or J.Crew and Neiman Marcus. They're still continuing to accept gift cards without an expiration date, but they're in a little bit of a different boat because they're not liquidating. They may be closing down some stores, but the business is still continuing while they're in bankruptcy since they plan to restructure their business.
But don't some companies in bankruptcy think about their future when deciding whether to honor gift cards?
The retailers will continue to honor gift cards, especially if they're trying to sell the brand name or something like that.
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Chapters
7 chapters
1
How urgent is it to use gift cards from retailers that filed bankruptcy during the pandemic?
0:05–1:02
2
How many gift cards go unused annually and why does that matter?
1:02–2:20
3
How do retailers decide gift card acceptance timelines after declaring bankruptcy?
2:20–3:33
4
How do liquidation cases like Pier 1 or Stage Stores handle gift card expiration and online shopping?
3:33–5:09
5
Why might some bankrupt retailers continue honoring gift cards to preserve brand value?
5:09–7:06
6
What notification steps must retailers take and why is contacting gift-card holders difficult?
7:06–7:49
7
Can consumers recover gift-card value in bankruptcy court and is it worth filing a claim?
7:49–7:52
Speakers
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