Buyer beware: Gift cards, retail chain store closings and bankruptcies

Posted on November 20, 2008. Filed under: Bargain Shopping, Personal Finance | Tags: , |

If you tend to give or receive gift cards around the holidays, or have gift cards you have not yet used, you need to be careful.  The cards may not be honored after the holidays if the retail stores are going out of business or have filed for bankruptcy.  Filing for bankruptcy doesn’t necessarily mean that they’ll be stopping operations, but it’s not a good sign.

Newspaper and journal articles have circulated with names of 32 retail chains that are closing some or all of it’s stores. Stores that are planning to close after Christmas are still selling the cards through the holidays even though the cards may be worthless January 1. There is no law preventing them from doing this.  On the contrary, it is referred to as ‘Bankruptcy Planning.

“There are cases already showing up because gift cards will not be honored because the business is no longer in business,” UAB economics professor Mickey Gee states, ” If you buy a gift card, buy it from a company you think will be in business. Give it to the recipient and tell them not to wait to use the gift card.”

He says stores that have filed for bankruptcy aren’t required to honor the cards unless a judge orders them to do so.  In those cases, Gee says there could be stipulations. He cited Sharper Image that is allowed to redeem gift cards after you’ve spent 200 dollars.

Instead of a store specific gift card, you might want to consider giving a VISA or Mastercard gift card which the recipient can use anywhere.  If you do give a store brand gift card, just make sure the store locations near the recipient are not targeted for closing or can be also be used for online purchases if the store has an ecommerce site.

Below is a partial list of stores that you need to be cautious about:

Circuit City (filed Chapter 11 and closing 155 stores)

Ann Taylor 117 stores nationwide closing

Lane Bryant, Fashion Bug ,and Catherine’s to close 150 stores nationwide

Eddie Bauer to close stores 27 stores and more after January

Cache will close all stores

Talbots closing down specialty stores

J. Jill closing all stores (owned by Talbots)

Pacific Sunwear (also owned by Talbots)

GAP closing 85 stores

Footlocker closing 140 stores more to close after January

Wickes Furniture closing down

Levitz closing down remaining stores

Bombay closing remaining stores

Zales closing down 82 stores and 105 after January

Whitehall closing all stores

Piercing Pagoda closing all stores

Disney closing 98 stores and will close more after January.

Home Depot closing 15 stores

Macys to close 9 stores after January

Mervyns closing all stores

Linens and Things closing all stores

Movie Gallery filed Chapter 11 and is closing at least 920 stores including 220 Hollywood Video

Pep Boys closing 33 stores

JC Penney closing a number of stores after January

Ethan Allen closing down 12 stores.

Wilson Leather closing down all stores

Sharper Image closing down all stores

K B Toys closing 356 stores

Loews to close down some stores

Dillard’s to close some stores

Steve & Barry’s has filed bankruptcy

Shoe Pavillion has filed bankruptcy

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