Sears Fail: Don’t get stuck with their gift cards.
By Consumers Union on Thursday, January 12th, 2012
Sears seems to be in trouble. Actually, Sears seems to be in big trouble. So unless there is a sudden revival in the catalog mail order industry we suggest that you use any outstanding gift cards now. If the historic company cannot turn things around and files for bankruptcy, consumers with cash on a Sears branded gift card could lose their money.
Take our advice: If your kids got you another tie instead of that Craftsman belt sander you wanted now may be the time to dig through those old unused gift cards.
If you have a retailer gift card, and the retailer holds the funds and then goes bankrupt, you may lose all your money or wait a long time to receive only pennies on the dollar. Once in bankruptcy, the retailer must petition the court to set aside gift card funds. If the court does not approve, or the retailer never makes the request, then the only recourse is to file as an unsecured creditor with the court – and you’ll probably get little to nothing in the end.
Multi-use, network-branded cards (with a network logo like Visa or MasterCard) do not have this problem because they are issued by national banks and can be used at a variety of retailers – but note that these types of gift cards can come with extra purchase fees.