Author Archives: rohit.singh

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The Gift Card Comes Wrapped in Growing Risk

The whole issue of not choosing to honors gift cards of customers may turn out to be a serious one, especially if this continues to be a trend for companies filing for bankruptcy. The most worrying factor in the whole issue is that why is there no regulation or law that disallows companies from doing so. There should be absolutely no scope for any company to decide that it will not redeem the gift cards.

I somehow get the idea that Jim Babb, the spokesperson of Circuit City almost expected applause when he made the statement that Circuit City would honor all gift cards irrespective of when they were bought. To begin with, it is the obligation of the company to honor all gift cards. Forget the law and all the possible accounting standards we could introduce, but is there anything that the consumer or customer has done to fight this. How about a consumer forum where customers can join forces, voice their opinions and ensure that the concerned governing bodies take action against such companies? These distressed customers probably still won’t be able to get anything out of their existing cards but they can save millions of other customers from being cheated in the future and prevent companies from taking this so lightly.

Now coming back to accounting, I definitely feel that FASB should introduce some standard or guideline to accommodate or better still treat these customers with valid gift cards as creditors of the company (or something on those lines), in the near future. Clearly this is a loop hole that companies have been taking advantage of, it has to be stopped and stopped soon.

Posted in The Accounting Standard Setting Process | 1 Comment