Shop with good cheer but watch the fine print

Dec 21, 2009

By Dale Goldhawk

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The fine print is still with us and, at this time of the year, one of the examples of fine print we have to watch carefully is on gift card contracts.

The concept is simple. Retailers and others offer us, not only products on their shelves, but a form of rain check in case we can’t find what we want immediately or can’t decide what the recipient might want. It’s called the Gift Card and it has become very popular because, essentially, it is a good idea. We can go to the store and exchange some of our cash for this little card. We can put the gift card in a stocking for a family member or mail it anywhere instead of packing an envelope full of real money. We can put the amount we decide on the card and the recipient can spend up to this amount on anything he or she wishes depending on the store or company that issued the card.

The beautiful simplicity of the concept, however, has been cluttered up with fine print. Isn’t it sad how the best ideas of the marketplace are so often cheapened and made suspect by greed? I’m sure the authors of the fine print will have many excuses for complicating the concept but it boils down to them trying to wring every bit of return out of this nice convenience. If it isn’t greed, what is it?

If the issuers don’t like to pay the cost of this promotion, they don’t have to participate. If they do want to play, the gift card should be kept as what it was meant to be. A gift card gives the retailer money right now regardless of the actual making of a purchase of a product from the store. In return, the consumer should get a card which is just like money he or she can use to pick out a product from that store at any time in the future.

Why, for pete’s sake, should there be an extra charge to the consumer who is giving what amounts to an interest-free loan to the retailer?

You can buy a gift card for many individual stores or chains. Or you can go to a mall and buy a gift card good for a whole assortment of participating stores.

A $50 gift card should cost the consumer $50. In fact, the tax code says a gift card is the same as money and, therefore, should not be slapped with GST or PST (or HST) when purchased. To tax the card purchase amounts to double taxation, since the consumer pays again on the product that is bought with the card. Yet some stores charge sales tax on the card – this is fine print and it’s not only wrong, it could be illegal.

In Ontario and some other provinces, there is no expiry date on a gift card, if you buy the gift card from a specific store or chain. All provinces should have and enforce this rule. Why should the card – which the tax people say is the same as cash – ever expire. Money never expires; it just fluctuates in value and so does a gift card because the prices of goods it buys go up and, sometimes, down. Expiration dates are in the fine print.

Generally speaking, the No Expiry rule does not apply to cards for only one purpose or service, such as gift cards for a manicure or a visit to a spa. Also, the law does not apply to any gift cards given away for promotional purposes. This is fair and likely logical to most consumers.

Here is a big exception to the no expiry rule. A mall gift card is good for any participating store in a shopping mall. But, the mall is able to charge you a one-time activation fee. Then, if you haven’t used it all within 18 months, the consumer can be nipped with a ‘dormancy fee’, eventually whittling a card value down to nothing. Fine print that makes no sense at all!

Visa and MasterCard are also in the gift card business. You can buy them at a post office outlet and at several retail chain stores. These cards have activation fees, monthly fees after a few months and expiry dates. You see, expiry date rules don’t apply to banks because banks are regulated by the federal government and the feds have no appropriate legislation. Again, fine print strikes.

So, before you buy a gift card, read the fine print – usually online somewhere or on the back of the card – or ask about additional charges and expiration dates at the store before you buy. And take your magnifying glass with you because fine print is always almost indecipherable. At the same time, learn about the returns policy of the store because, no doubt, there will be fine print there as well.

Wouldn’t it be nice to have a truly honest, safe marketplace where the only fine print is in the last line of the eye chart? That’s what I fight for all the time.

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