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Cash or trash?

If you are giving gift cards for Christmas, or if you receive one, check to see how long it will be usable so your nugget of gold doesn’t turn into a lump of coal.
Why? The struggling economy has forced many stores to cut back. These take various forms, such as reducing the number of employees, carrying less stock, offering fewer services or reduced warranties, stopping construction of new stores, closing down smaller less productive units, to more serious forms such as closing many stores and/or filing for bankruptcy.
If you have a computer, you have probably received the email citing over 20 stores that are either closing multiple stores, filing Chapter 11, or going out of business altogether. Hopefully, you have checked the validity of this email and learned which information was correct.
It is true that some businesses have filed for Chapter 11 bankruptcy protection and began liquidating and/or closing all of their stores. Circuit City is closing 155 stores across the country. Movie Gallery/ Hollywood Video has closed over 1,000 of its video rental stores, but emerged from bankruptcy reorganization in May 2008 and currently operates about 3,500 outlets. KB Toys was also in Chapter 11 bank ruptcy in 2004, but emerged in 2005 and has refiled for bankruptcy.
Macy’s closed 11 of its approximately 850 stores this year. Pacific Sunwear closed 74 underperforming stores in 2007 and all 154 of its remaining d.e.m.o stores in 2008, but has not yet announced any plans to close any of its core Pacific Sunware outlets. Sprint announced this year that it would be closing about 125 of its 1,400 retail outlets.
Some businesses are closing underperforming stores, but may still be opening new stores in other locations. These include Eddie Bauer and Gap clothing stores.
Businesses to watch may include Dillard’s department store chain. It will close 21 outlets this year and expects to close more in 2009. The Foot Locker chain of shoe stores falls under this bracket, closing 274 of 3,700 outlets with 60 more underway and more closures likely.
The Home Depot announced in May 2008 that it would be closing 15 underperforming stores, while Lowe’s expects to open 115 to 120 new stores by the end of this year with more new stores, and no closures, planned for 2009.
These are just a few, however the bottom line is this: If you get a gift card for Christmas, use it immediately and especially by New Year’s. If you don’t, you may find the store closest to you has closed or gone out of business. If that happens, it will be a gamble as to whether you will get to use the card at all.
In September, USA TODAY reported, “Consumers Union and several other consumer groups petitioned the Federal Trade Commission to improve consumer protections for gift card holders. The groups asked the FTC to require retailers to segregate funds from gift card sales in a trust account, and use that money to honor gift cards as long as the stores remained open, unless ordered to do so otherwise by a bankruptcy court. So far, the FTC hasn’t responded to the petition.”
In the event you find yourself with an unusable gift card, due to a store going out of business, start with the store itself and try to work out an agreeable solution. It may be there is a store in another area that is still open. You may be able to use it online. Sometimes, a competitor will allow you to use at least some of the value of the card in order to get your business.
If that fails, then file a claim with your credit card user if that was how the gift card was purchased. Go to www.uscourts.gov to find the bankruptcy court overseeing the case. File a proof of claim with the appropriate court and submit your evidence. Protest to the state attorney general as this may just start the push for new consumer protection. If all else fails, and you wish to pursue the issue, you may have to take the matter to court.
If you have or wish to give gift cards for Christmas, consider the financial health of the retailer, or give gift cards from the major credit card issuers that can be used in almost any store. Giving gift cards for gasoline or groceries are sure to be used quickly and are practical gifts.
While the adage, “It is better to give than to receive,” may be true, it pays to do your homework and remember another adage: “The early bird gets the worm.” Redeem it immediately and everyone is happy.
(Photo a Daily News illustration)

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