As retailers sell more gift cards consumers are losing out. There are some major retailer which have gone bankrupt due to mismanagement and consumers who had purchase gift cards of those companies would have a very difficult time to claim that money back. Most consumers gives up on the process and does not proceed to the bankruptcy court.
Gift cards should be redeemable regardless of bankruptcy. It should be accounted in the company’s financial so that it will allocate a portion of goods or money just for Gift Cards. If a company is about to go bankrupt, it should allocate some resources for giftcard refunds or if the customer wants to let them purchase items until the actual closing of the store. Then during bankrupcty ruling, customers with gift cards should be able to send in their cards to redeem the cash spend to purchase it. Thus retail company should have an amount of money set aside if it is moving towards bankruptcy.
The use of third party sites to facilitate the exchange of gift cards is a very good idea because this will help those who do not see a need to use giftcards that they have to exchange with someone else for a more useful giftcard. These websites will decrease the effect of consumers not spending their gift cards as well as consumers losing out when retailers bankrupt.
Sometimes it’s hard for a company to know if they will go bankrupt or not. As bad as times may be, some companies manage to be bought out and avoid bankruptcy. If such companies were prevented from selling gift cards because they were nearing bankruptcy, then the prevention would be damaging to their net income and the possibility of a buyout.
Yes, that would differentiate between gift card and actual cash. Yet company should not be permitted to continue to sell gift cards knowing that they will potentially bankrupt and those gift cards will be worth nothing when they do.
It does not make sense to force companies to set aside funds to pay for gift cards in case they go bankrupt. The consumers should be very aware of their purchases and and the benefits/limitations of their purchases. Like all consumer purchases, gift cards provide a service first and foremost. It is not intended to be cash. If consumers fail to act upon the benefits of their purchase, one cannot fault companies for not covering their failure to do so. If you want to give a gift that has a monetary vaule attached to it, just give cash or check.