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dasunst3r
November 18, 2009 4:52 PM
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May I suggest the Greenback Ultimate Gift Certificate? It comes in $1, $5, $10, $20, $50, and $100 denominations and is legal tender for all debts, public and private!

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2 replies
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TCama
November 18, 2009 4:52 PM
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@dasunst3r: It's got some crazy fees though. For example, every year it decreases in value by 4% or so.

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dasunst3r
November 18, 2009 4:52 PM
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@TCama: The same is going to happen with gift cards, but the value would decline faster because of the fees, right?

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bhr
November 18, 2009 4:52 PM
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I'm all for customer protection on gift cards, they are a scam and a half in most cases (I know I have about $250 worth in my wallet right now I havent used) but why the fudge is the FED getting involved?

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4 replies
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RandomHookup
November 18, 2009 4:52 PM
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@bhr: If I'm not mistaken, several of the banks in the market are claiming the states don't have jurisdiction on these instruments since they are federally-chartered banks. Thus, someone at the Federal level needs to be involved to keep the fight from going 51+ jurisdictions.

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LostAtoll
November 18, 2009 4:52 PM
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@bhr: who cares as long as the scam is being shut down, right?

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Shaggy
November 18, 2009 4:52 PM
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@bhr: The Fed is getting involved because most gift cards are issued by banks, and then re-branded for specific businesses.

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nbs2
November 18, 2009 4:52 PM
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@Shaggy: Good point. Maybe. Are we talking about store gift cards or the CC issuer gift cards? I'm pretty sure that the store gift cards (e.g. the stuff you get when you return a purchase for store credit) you get are issued by the store, not a bank.


Hey Chris - If you have some inside sources, can you find out what gift cards are they talking about?

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katstermonster
November 18, 2009 4:52 PM
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Welcome to Connecticut...our liquor stores are closed on Sundays, but there are no expiration dates (or fees, that I'm aware of) on gift cards!

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1 replies
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aloe vera
November 18, 2009 4:52 PM
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@katstermonster:
Thanks, Richard Bluementhal!
Now we need to work on the liquor store thing.

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sirwired
November 18, 2009 4:52 PM
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The Fed? Huh? Wouldn't this be more of an FTC kind of thing?

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1 replies
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tonberry
November 18, 2009 4:52 PM
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@sirwired: hmm, what does the F in FTC stand for again?

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biggeek3
November 18, 2009 4:52 PM
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There's no reason gift cards should have any fees paid by the recipient at all.

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azzie
November 18, 2009 4:52 PM
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@biggeek3: First, businesses can not have indefinite liability and carry it on the books forever. Second, States usually want to reclaim forfeited/abandoned property, and unused for long period gift cards will qualify. Third, IT dept does not want to store old account data online as it makes growth more complicated.

To avoid dealing with these issues, businesses implement maintenance fees and/or expiration dates. The primary goal is to get rid of inactive accounts. Making money is secondary.

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Thorzdad
November 18, 2009 4:52 PM
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@azzie: Then they shouldn't be in the business of offering the cards. I mean, it isn't rocket science to understand that a lot of these cards will sit unused for a long time. They know this going in. If you can't manage this type of product offering to match the way you KNOW the consumer will use it, then stay away from this market (Unless your actual goal is to profit on fees in the first place, of course)

The very fact that you argue the cannot have these on the books indefinitely is actually an argument FOR clearly revealing the fees and expiration dates up-front, at point of purchase. And, by \"clearly\" I mean plain english in 10pt type on the card itself. Not buried in 5pt compressed legalize along with all the other legal disclaimers, copyright notices, etc.

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azzie
November 18, 2009 4:53 PM
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@Thorzdad: YESSS - unreadable fine print pisses me off.

What we really need on consumer side with regard to fine print, is a requirement similar to the fine print on cigarette packs: health-related warnings can not use be smaller than X% of largest font used on the pack. There a color and contrast requirements as well.

Something like this would put a big dent on the issue. As consumer becomes better aware of fee schedule, it will spark more productive competition.

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TuxthePenguin
November 18, 2009 4:52 PM
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@azzie: To your first point (don't want a liability sitting on their books), GAAP rules allow for companies to write off gift-card and related liabilities. The classic example is Disney five-day passes. Technically, they never expire. They are, in effect, a gift-card for five free passes. Disney's auditor (I think it is what is now KPMG) disagreed with Disney's accounting to not carry that liability on their books after the first month or so.

Disney, though, showed that the vast majority of the time if the five day pass isn't used within the first WEEK, they are never used. Therefore, there is no real liability. FASB and the SEC agreed with the reasoning and its part of GAAP now.

The same thing applies to gift cards. But I believe their write-off to revenue is something like two years.

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Coles_Law
November 18, 2009 4:52 PM
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@azzie: All valid points, but look at some of the fees on a Visa gift card-activation fee, monthly fees, usage fees, non-usage fees, balance check fees. That is excessive.


I've got a gift card now that I've been sitting on for a few months. It won't start losing value for a year, at which point it will be another year or so before it is consumed by fees. I'm fine with that-no need for the company to keep track of that $30 until 2025 if I'm too lazy to use it. But if there was a $5 activation fee and $3/month fee, it would already have lost over a third of its value.

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azzie
November 18, 2009 4:53 PM
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@Coles_Law: I absolutely agree with you. Many company cross the line with fees, which dilutes the value of the gift card from the face value advertised on it.

Speaking of Fed's regulations, allowing monthly fees to kick in after a year of inactivity sounds reasonable to me. If I had any say, I would also add that those fees should not exceed, say, 2-3% of the face value of the card per month.

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wvFrugan
November 18, 2009 4:52 PM
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@azzie:
\"The primary goal is to get rid of inactive accounts. Making money is secondary.\"


Boy are you full of shit, who are you a shill for?

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TouchMyMonkey
November 18, 2009 4:52 PM
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@wvFrugan: He's still living in 1970, when this was closer to the truth.

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azzie
November 18, 2009 4:52 PM
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@wvFrugan: Man, you are rude. Trying seeing both sides of the coin, you might learn something...

(I run a system with half a billion accounts in it)

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shepd
November 18, 2009 4:52 PM
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@azzie:

And your system doesn't slow down every day while it processes every single card to find those it needs to devalue?

Seems to me a database record written once and never touched again sits on disk and never causes a problem, whereas a database record read daily and changed monthly does.

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samspot
November 18, 2009 4:52 PM
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@shepd: When he says IT doesn't want to store it, he means that ancient data makes system upgrades overly complex (lots of extra man hours).

The devaluing transaction is most likely completely automated and minor compared to what goes on in that database. Once a month is nothing when you are doing millions or billions of transactions a day.

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shepd
November 18, 2009 4:52 PM
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@samspot:

Once a month, for EVERY item in the database. And, if the card doesn't specify a date, once a month per card, which means running through 1/28th of the entire database every day on one month.

A decent database server would just leave untouched data on disk and only cache the index in RAM. That would leave plenty of room for billions of gift cards, more than any store will ever deal with. But, unless you more than double your index space, as you're now storing not only a simple serial, you're also storing a complex renewal date as indexes, and that will, obviously, require a lot more overhead.

Or, you're not indexing on the date and therefore have a slow, terrible system when it comes to expiring cards--or you have a quick, simple system because you don't need to index any dates.

A well designed database with even access (shudder!) as the underlying server simply would not have any problem with not expiring records like these.

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azzie
November 18, 2009 4:53 PM
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@shepd: You are right that well-architected system must have scalability by design (unless you inherited one which wasn't built that way).

Majority of the issues with large dataset are on the operational side. As example, we had corrupt block in index of a \"hot\" part of the table, and the larger the dataset, the longer it takes to rebuild it (and longer the outage). Then there's government (e.g IRS) which asks for data where visibility into it isn't indexed; so you have get it by joining tables with billion rows in them. So instead of simple SQL it turns into a project of kicking the data around the warehouse just to have it processed.

But, on the positive side - for some it's job security ;-)

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samspot
November 18, 2009 4:53 PM
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@shepd: It sounds like you know enough about databases to understand that the card devaluation transaction is trivial.

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shepd
November 18, 2009 4:53 PM
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@samspot:

Yes, it is trivial. Heck, you could implement it as a stored procedure. But, the fact remains that the database itself becoming \"overloaded\" is not a good excuse for expiring cards. Removing the old entries takes more effort (however little it might be) than leaving them there. Overall, the effect of expiring cards is to increase the workload.

Now, I suppose you could be storing a lot of data with each record, but... why? And, for an unused card, if you've done proper rationalization, it still shouldn't be taking more than a few bytes of space even if you store a lot of details about its use.

Just my 2 cents. :)

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XTC46
November 18, 2009 4:52 PM
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I dont think the federal reserve should have any say on giftcards. They are a contract between a store and a consumer, and other than that there should be no outside interfearance. This is like the gov. telling a store howmuch to charge for something.

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Shaggy
November 18, 2009 4:52 PM
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@xtc46 - thinksmarter on twitter: Actually, since the cards are usually issued by banks (and then re-branded by businesses), the Fed is the perfect regulator for this. And, no, it's not like \"telling the store how much to charge\", it's more like telling the store to stop ripping off their customers.

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rachmaninov1
November 18, 2009 4:52 PM
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I'm not sure where the authority for Fed intervention truly rests, but it appears to me that these gift cards are cash substitutes, and as long as the Fed controls the dissemination of cash (through its wonderful ability to purchase cash from the US Treasury at production cost), it just might have some say over those who can also seemingly magically create cash substitutes.

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CaptZ
November 18, 2009 4:52 PM
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I agree, Fed should saty out of this busimess. Fed seems to do nothing but screw things up.

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1 replies
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wvFrugan
November 18, 2009 4:52 PM
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@CaptZ:
Can you please make this comment with some substance to back it up? Please include some comparative analysis of how the private sector has performed!

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MooseOfReason
November 18, 2009 4:52 PM
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Actually, I saw an American Express sign at the store by the gift cards, and they said \"No fees after purchase.\" So I guess they're already doing that.

By the way, what happened to the comments system? It's all shoved over to the left.

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ShadowFalls
November 18, 2009 4:53 PM
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@MooseOfReason:

I think that is the whole idea of those types of gift cards. They are paid upfront for the gift card including an extra fee. They also even get more from the transaction they are used on, people don't realize that.

The store gift cards are another thing. They should never have any fees or ever be able to expire, period. The bank issued gift cards in my opinion, shouldn't be able to either. If they take your money and that gift card isn't spent for 5 years, they earn 5 years of interest. Keeping it \"on\" the books, isn't a complicated task in the age of computers.

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gStein_*|bringing starpipe back|*
November 18, 2009 4:52 PM
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Chris Chris Chris Chris Chris... i know HTML is hard, but...

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FatLynn
November 18, 2009 4:52 PM
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To quote the late great Mitch Hedberg, \"I don't understand why you'd buy someone a gift card. You take money, which is good everywhere...\"

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willystyle
November 18, 2009 4:52 PM
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How unfortunate a choice for Ms. Johnson's parents (or perhaps marriage)...JJJ...

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Loias calls you out if you can't RTFA
November 18, 2009 4:52 PM
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The fees need to be tied into something, such as no more than apercentage of the balance. I don't see a cap on the amount of fees they can impose (only the frequency) which is troubling.

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tailstoo
November 18, 2009 4:52 PM
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The Fed is now trying to show that it actually cares about consumers, after Dodd proposed that the new Consumer Protection Agency be separate from the Fed. Now that it looks like they might lose some power, they are desperate to do something that they can point at to say how great they are to the masses.

It's nothing more than an act. They're a board of bankers. Like they care if we get ripped off.

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SatisfriedCrustomer
November 18, 2009 4:52 PM
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I was hoping for rules like \"Gift cards cannot be given as birthday presents, and in the case that one is given instead of a real present, the recipient is not required to say Thank you.\"

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hotdogsunrise
November 18, 2009 4:53 PM
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@SatisfriedCrustomer: I've never understood why people are unhappy with plain ol' cash. Because then I can take it and actually buy what I want! Or put it toward bills! I mean, someone is giving you money, for whatever reason: sweet!!!

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RandomHookup
November 18, 2009 4:52 PM
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@SatisfriedCrustomer: Strange, because I'm always open to getting gift cards since a Christmas ornament for a guy who doesn't celebrate is really a waste of money.

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AustinTXProgrammer
November 18, 2009 4:52 PM
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Gift cards: You make an interest free loan and they charge you for it!

We need to form a non profit to promote cash giving. It used to be ok, but somehow all the marketers pushed that as being to impersonal. The setup the flimsy foundation gift cards ride on.

As a child I would often ask for cash, so I could pool it and buy something big. I would shop for the best price when I got ready to buy, so it was a good thing I didn't get locked into a store.

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CrazyBooduh
November 18, 2009 4:52 PM
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What I would REALLY like is for it to be illegal to say \"Gift cards cannot be used on daily specials or happy hour items.\"

Gift cards are paid for with cash at your establishment and should be considered as such. This is easily my biggest complaint about gift cards.

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ninjatoddler
November 18, 2009 4:52 PM
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They just need to make gift cards simple.

1. 365 days to use after activation with no fees.
2. 365 days after activation, monthly fees can be injected until balance is drained to 0.
3. 1 year as total time limit for an inactive card before it is automatically activated.

How hard was that? BTW, I just got a stupid Toys R Us gift card instead of a discount on some items I purchased and the gift card expires at the end of year. Somehow, I need to use it up before Jan 1, 2010???

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SatisfriedCrustomer
November 18, 2009 4:53 PM
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We need an after-market clearing house for gift cards, like Cash4GiftCards.com. Do you have dozens of old gift cards? Turn them into CASH with Cash4GiftCards.com! Simply place your old cards into the insured envelope , and in 2-6 short years you'll receive cold hard cash in the mail!

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pdxazn
November 18, 2009 4:53 PM
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I'll not buy any gift card with expiration date or fee. They are already using my money paid on the gift card for free without rendered the service or merchandise. Some even charges you for buying the gift card. It costs them little or nothing to keep the gift card alive. What right do they have to take my money away without giving me the services?

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