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State-by-State Gift Card Laws

It is that time of the year when you hear a lot about gift cards and how they make such a great gift. But this year, the news surrounding gift cards has focused on retailer bankruptcies and their impact on gift card holders. Then there is the now famous misleading viral email warning consumers to stay away from gift cards issued by some major retailers, like The Home Depot and Ann Taylor due to the possibility their gift cards would become worthless should the retailers go bankrupt. 

In the midst of all this misinformation and anxiety about gift cards, it is therefore timely that Manhattan Advertising & Media Law, a Manhattan Beach, CA law firm, has put together an online gift card map that provides a state-by-state summary of gift card laws. Users can click on any state to read a brief summary of that state’s gift card statutes, including what happens to gift cards during bankruptcy and state law regarding gift card fees and expirations. 

The LA Times has a piece describing the map in detail. While I am excited about the state-by-state provisions on fees and expiration, I think readers will also find it interesting that only five states, California, Montana, New York, Oklahoma and Washington, have specific laws dealing with what happens to a gift card’s value when the card issuer goes bankrupt. However, as noted in the LA Times article, these State laws regarding bankruptcy and gift cards have proved ineffective in protecting gift card holders in bankruptcies. This may be why some are pushing for action at the federal level from the Federal Trade Commission.

Readers, from looking at the map, does your state have laws regarding gift card fees and expiration? If so, do they go far enough? If not, what would you like to see done? Please post your comments in the comments section below. 

Tweeter to accept gift cards in bankruptcy till stores close

As you are probably aware, Tweeter, the electronics retailer is going out of business and closing all stores by the end of the year. As I reported earlier in this piece, the company had announced it was only going to honor outstanding gift cards for 5 days (yes, 5 days), after which gift card holders are pretty much out of luck. Well, not so fast. 

Attorney Generals from a few states, including Maryland and Connecticut decided to step in and pressure the retailer to allow more time for gift card holders to redeem their gift cards. The company has since agreed to continue to redeem gift cards until stores close. 

So, if you are still holding on to a Tweeter gift card, NOW is the time to use it or lose it. All stores are supposed to close by the end of the year. Kudos to the state Attorney Generals that stepped-up to protect consumers. This may be a model for the future to ensure that retailers, some of whom continue to sell gift cards the day before they declare bankruptcy, will not be allowed to take consumers for granted. 

Gift Cards and Bankruptcy Update – 11/17/2008

Folks, I felt the need to provide a quick update on major retailers that have recently filed for bankruptcy and what that means for gift card holders.

It is estimated that consumers will lose about $100 million this year on gift cards due to bankruptcies. If you are still holding on to gift cards from last Christmas or birthday, now is the time to use them or risk losing them.

Below is an updated list of recent major retailer bankruptcies and their impact on gift card holders:

Tweeter – Tweeter, the electronics store chain filed for bankruptcy on Nov. 5, 2008. The company was granted permission by the U.S. Bankruptcy Court on November 10th to continue the redemption of gift cards through Saturday, Nov. 15 (yes, only 5 days to redeem gift cards). If you were unable to redeem your gift card by that date, the only option left is to file a claim with the Bankruptcy Court for the unused portion of your gift card. However, you could be waiting a long time for this and chances are, you may get pennies on the dollar, if at all.

Circuit City – Circuit City filed for bankruptcy reorganization, meaning that they plan to restructure the business and come out of bankruptcy a more efficient company. They are still accepting gift cards during the bankruptcy and are still issuing new gift cards. If you haven’t done so already, use your Circuit City gift card soon. I will also advise against buying a new Circuit City gift card at this time.

Linens ‘n Things – Linens and Things initially filed for bankruptcy reorganization in May 2008 but things did not work out as planned so the company decided on October 15th to shut its doors. They are still accepting gift cards during the liquidation so this is your last opportunity to use your Linens and Things gift card or say goodbye to it forever.

The Sharper Image, Bennigan’s and Steak & Ale Restaurants, Value City Department Store, Mervyn’s Department Store, Steve & Barry’s, Boscov’s Department Store have all declared bankruptcy this year. For more on these companies, check out the Bankruptcy & Gift Cards page.

Circuit City Going out of Business?

Folks – For those of you who have been reading this blog all year, you are probably familiar with the stories I have posted about Circuit City and the constant rumors about whether they are going to stay in business or not.  In April 2008, I predicted in this piece that of all the retailers that are struggling, Circuit City, together with Linens ‘n Things, The Gap, Sears, Kmart, Pier 1, and Office Depot are likely to go bankrupt. Well, unfortunately, some of this is coming to pass. Linens ‘n Things is going out of business and it looks like Circuit City may not be too far behind.

I am putting Circuit City in this category because the company has yet to find an answer to Best Buy. In May, I posted this story about problems at Circuit City and the offer from Blockbuster to merge the two companies. Since then, the company has missed earnings and has been laying staff off. But the problem seems to be the business model, which has yet to be fixed to better compete with rival Best Buy.

The current economic crisis has made things worse and according to this story from Reuters, the company is planning to close 150 stores and lay off thousands of workers. Whether this will stop the bleeding is anybody’s guess. So, if you currently hold a gift card from Circuit City, I strongly urge you to use it NOW! There is a real possibility the company may have to file for bankruptcy and you don’t want to be left with worthless gift cards.

Linens and Things Going out of Business

Folks, the economic tsunami has taken down yet another retailer – Linens ‘n Things. As I reported in this piece back in April, Linens ‘n Things has been struggling under the weight of the economic downturn. The company filed for bankruptcy reorganization in May, hoping to come out of bankruptcy as a leaner, more focused company. It appears things did not work out that way.

The company has therefore abandoned its reorganization plan and has auctioned its assets to the highest bidder. As a result, beginning Friday, October 17th, all remaining 371 Linens ‘n Things stores in the United States will begin their “Going out of Business Sales” where their entire inventory will be sold at a discount.

What does this mean for gift card holders? If you currently hold a Linens ‘n Things gift card, you may be out of luck. As I mentioned back in May, the gift cards were redeemable while the company was undergoing reorganization. But now that they have decided to liquidate the business, your card may be worthless. However, I encourage you to try and see if they will accept your card during the liquidation sale (please be kind and post your findings in the comments section to help others in a similar predicament :):)

Which brings me to the question of why the company did not alert gift card holders to come in and redeem their cards when they knew they were going under? I will explore this issue in another article since the same thing happened with The Sharper Image when they abandoned their reorganization plan and decided to liquidate the entire business, leaving gift card holders with worthless gift cards.

Bankruptcy & Gift Cards – State Attorney Generals can help

Today’s piece is a follow-up to this story I posted on June 18th about a local spa in Missouri – Spa 151 that went out of business, leaving gift card holders with worthless cards they could not redeem. Some gift card holders filed complaints with the Missouri attorney general’s office. The attorney general was able to settle the issue with the owners of the spa for $103,000.

So far, 660 people have filed claims with the attorney general’s office and anyone with a claim has been given until Sept. 4th to file, after which checks will be issued to those affected. If you are a Spa 151 customer currently holding their gift card and would like to file a claim, click here for details.

This is great news and it sets precedence for how consumers can rely on their state’s attorney general’s office to fight for them in these situation, especially with local businesses that suddenly close shop, leaving their customers with worthless gift cards.

Logan’s Roadhouse to accept Bennigan’s and Steak and Ale Gift Cards

More good news for holders of bankrupt Bennigan’s and Steak & Ale Gift Cards. According to this story, Logan’s Roadhouse will begin accepting unused gift cards from Bennigan’s and Steak & Ale restaurants. This follows a similar announcement by Texas Roadhouse.

As you are probably aware, Bennigan’s and Steak & Ale filed for chapter 11 bankruptcy earlier this month. Both companies are still redeeming gift cards but as you can see, the competition is trying to take advantage of this situation and steal customers from Bennigan’s and Steak & Ale.

Logan’s Roadhouse restaurants will offer guests a free entree, with the purchase of another entree, up to a $15 value, when guests bring in a Bennigan’s or Steak & Ale gift card. This offer will run through Aug. 31. There is no limit to the number of gift cards guests can redeem. The offer is not valid in North Carolina, South Carolina and Augusta, Georgia locations.

Boscov's Department Store files for bankruptcy – Will still redeem gift cards

Boscov’s Department Store, America’s largest family-owned independent department store, filed for chapter 11 bankruptcy protection on Monday, August 4th. According to this story from the Associated Press, the company blamed it’s current predicament on the current economic turmoil, with shoppers struggling with higher food and gas bills, tighter credit, a persistent housing slump and increasing layoffs. This has caused consumers to spend less on discretionary items. As a result, the company has been having difficulty paying suppliers. The company will close 10 stores while it reorganizes.

Boscov’s received approval from the bankruptcy court to continue the redemption of gift cards. If you have a Boscov’s gift card, NOW is the time to use it or lose it.

Texas Roadhouse to accept Bennigan's and Steak and Ale Gift Cards

Finally, a bit of good news for holders of bankrupt Bennigan’s and Steak and Ale Gift Cards. Texas Roadhouse has announced that holders of Bennigan’s and Steak and Ale Gift Cards gift cards can bring them to any Texas Roadhouse location and exchange them for free entree certificates.

Best of all, the free entree certificates have no menu item restrictions, which means they can be used to buy any item on the menu at Texas Roadhouse. All certificates expire on August 30th, so hurry and get rid of those Bennigan’s and Steak and Ale Gift Cards.

As always, i would appreciate your comments on this (whether you are able to exchange your Bennigan’s and Steak and Ale Gift Cards at Texas Roadhouse).

Mervyn's files for bankruptcy protection – Will honor existing gift cards

Mervyn’s department store has filed for chapter 11 bankruptcy protection. Mervyn’s stores will remain open and business will continue as the company goes through the bankruptcy process. According to this story from, the company has received approval from the bankruptcy court to continue to honor outstanding gift cards and loyalty programs.

Mervyn’s now joins a growing list of retailers that have filed for bankruptcy this year, including well known companies like Steve & Barry’s, Linens ‘n Things and Sharper Image. If you currently have a Mervyn’s gift card, NOW is the time to use it or lose it.

I expect more retailers to file for bankruptcy in the coming months considering the worsening economic situation. If you have received a gift card you don’t want or can’t use, you can sell it for cash at our sister website or exchange it for another card of your choice. You can choose from a list of over 30 popular gift cards including merchants like Home Depot, Target, Abercrombie & Fitch, Macy’s, New York & Company and Best Buy.

Stay tuned for updates on Mervyn’s bankruptcy situation and any changes to their gift card redemption policy.

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