Gift Scams

Common gift scams can leave consumers wrapped up in red tape. Before you decide to buy a gift card or sign up for a gift registry, you need to know what to look out for so retailers and issuers don't cash in at your expense. There are very specific state laws regarding gift cards and certificates, but you still need to worry about hidden fees and charges that could wipe out the value of your gift! For instance, in Massachusetts, the law requires gift cards to be good for seven years from the date of issuance. What isn't clear, however, is whether the value of the card has to remain good for seven years before any fees can reduce its value or whether the law even applies to a card that could be redeemed anywhere or issued by a seller who is out-of-state.

A few years ago, the Attorney General sued Simon Property Group (Simon Malls) over their gift cards. As of the April, 2006, the case is still in litigation. The AG's office claims Simon's is breaking the law because they charge an initial handling fee when you buy a card, and then if the card remains inactive they deduct a monthly fee which eats away at the card's value. Simon's on the other hand, alleges their cards are issued by a federally chartered bank and so they are not subject to Massachusetts law. Lawmakers are trying to trying to tighten things up - but at least for the time being you need to be very careful!

Before you purchase a gift card, ask questions. You have a right to know all the terms and conditions that may apply. Demand that the seller or issuer disclose what the expiration date will be, and what charges or fees may be applied to the card. If you are buying a card online take a good look at the disclosures set out in the fine print and figure out all the fees that may be applied. Most, if not all of them, are probably illegal under Massachusetts law! For example, the following fees may be considered illegal:

- a one-time handling fee
- a monthly fee of $2.50 or more sometimes called a "service fee" or "handling fee:
- a fee for contacting the card issuer to find out about remaining balances on the card
- a fee for claiming the unused monetary value of the card when the card expires with a remaining balance

Gift cards that have the VISA or MasterCard logo are especially notorious for having added fees that reduce the value of the actual gift. They also cause the most confusion. Many unsuspecting consumers figure because the gift cards have the VISA or MasterCard logo they are a safer bet and automatically come with the same protections as most credit cards do. Even if the seller does offer some protection in case the gift card is lost or stolen - if you don't know the number that was on the card you are out-of-luck.

Gift registries are another hotbed for deception. Before you sign up, find out exactly what the registries' policies are regarding things like inventory, stock availability and guaranteed promotional pricing. If you sign up at a registry too early, by the time the wedding rolls around and guests are trying to buy presents the items you picked out may be out of stock! Some stores don't keep any inventory on-hand, not even in their warehouse. The backlog from the time someone buys a gift until when it gets shipped can be 6 weeks or more! Your best bet is to get everything in writing. If you are signing up in a retail store, ask for their policies and pricing in writing. Flush out details like whether people need to buy you a certain number of place settings in order to get a promised price. And while you are at it, find out exactly how many pieces the store thinks makes up a place setting! Make sure they explain what the difference is between the "Manufacturers Suggested Retail Price" and their "Everyday Low Price." And if you are registering online, print out the written policy page and keep it in a safe place. You never know when you might need it.

Be smart, be savvy, and be an informed consumer. That's your best bet for making sure your gifts won't come wrapped up in red tape!

Copyright 2006 - Law Office of Gina M. Ghioldi, P.C.

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