Consumer Reports highlights gift card pitfalls

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Consumer Reports Takes on Gift Cards in Second Annual Public Education Campaign

Shoppers Warned That $8 Billion in Gift Cards Went Unredeemed Last Year;
Consumer Reports’ Survey Shows 27% of Last Year’s Gift Cards Still Unused

YONKERS, NY – Consumer Reports unveiled its latest public education campaign, warning holiday shoppers of the pitfalls associated with the ubiquitous gift card. Consumer Reports’ public education campaign kicks off on Tuesday, November 13th with a full-page ad in the New York Times advising shoppers that unredeemed gift cards can be easy money for retailers and lost money for consumers. TowerGroup estimates that nearly $8 billion was lost last year due to unredeemed value, expiration or loss of gift cards.
Consumer Reports will also launch a holiday shopping hub on www.ConsumerReports.org that will offer tips on how to avoid gift card snags and provides a place for consumers to share their stories about problems with gift cards.
Consumer Reports is also releasing its latest survey, which finds that 27 percent of gift card recipients have not used one or more of these cards, up from 19 percent at the same time last year. And among consumers with unredeemed cards from last season, 51 percent have 2 or more.
This latest effort by Consumer Reports follows in the tradition of last year’s public education campaign which advised shoppers to skip the extended warranty. Last year, the organization took out a full page ad in USA Today that was rebutted by a full page ad one week later from the Service Contract Industry Council.
“We’re building on our successful campaign from last year to inform consumers about the latest holiday pitfall to avoid,” said Jim Guest, president and CEO of Consumers Union, nonprofit publisher of Consumer Reports. “As an organization that doesn’t take advertising, we’re using this venue as a way to educate consumers.”
Gift cards are expected to be a major component of holiday giving with estimates putting sales at more than $100 billion in 2008. And according to Consumer Reports’ survey, 62 percent of consumers are planning to buy gift cards this season. Consumer Reports’ survey also found that when the time came for consumers to redeem their gift card, the majority of consumers also spent their own money, with 60 percent spending more than the value of the card.
“It’s easy to understand the appeal of gift cards. They’re the perfect no-muss, no-fuss gift for the finicky family member or friend. It’s a no-brainer…” said Tod Marks, senior editor at Consumer Reports. “But gift-givers and recipients alike need to be aware of the pitfalls and make sure that precautions are taken so that the recipient gets the gift and not the retailers.”
What Happened to Those Unredeemed Gift Cards?
According to Consumer Reports’ survey, more than six in ten shoppers plan to purchase gift cards this holiday season. But for the 2006 holiday season, 56 percent of respondents received gift cards and nearly a year later, 27 percent of gift card recipients have not used one or more of these cards. Among the reasons that gift cards have not been redeemed:
 Over half (58%) of consumers indicated not having the time; followed by not finding anything they wanted (35%).
 Nearly one-third (32%) of respondents who have unused cards from last holiday season did not use their gift card because they forgot about it.
 A good proportion of consumers (7%) will never redeem their gift cards from last season because the card is lost (3%) or expired (4%).
What Can Consumers Do?
Gift cards seem like a perfect solution to the problem of what to give this holiday season. Gift cards are offered by banks, shopping malls, retailers, airlines, restaurants, hotels, Web sites, and even state parks. But Consumer Reports offers the following tips for gift card-givers to help ensure that the gift is enjoyed by the recipient:
 Think twice about bank cards. While bank cards generally can be used at more retailers than store cards, they’re often loaded with fees and restrictions.
 Check the merchant’s prices. It’s annoying to get a $25 gift card for a store that sells little at that price. When selecting a store-issued card, find out how much things generally cost and get a card with at least that value.
 Send along the receipt. Some issuers require the original receipt to replace a lost, stolen, or damaged card.
For gift card recipients, these are some of the tips that Consumer Reports offers:
 Register it. Some cards must be registered with the issuer, especially if the card is used for purchases online or by phone.
 Spend it quickly. Use the card as soon as possible, especially if it expires or has a monthly maintenance fee.
 Spend it to the last penny. If the card balance gets so low that there’s nothing to buy, ask a merchant to do a split-tender transaction. That involves using the remaining card balance for part of the transaction and another form of payment for the rest.
 Hold on to it. Don’t throw out the card when the balance is zero. Some merchants require it for returns.
The Consumer Reports National Research Center conducted a telephone survey of a nationally-representative probability sample of telephone households. 1,000 interviews were completed among adults aged 18+. Interviewing took place over October 18-21, 2007. The margin of error is +/- 3% points at a 95% confidence level.