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NEWS RELEASE

November 26, 2008

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Ulman Warns Residents to Exercise Care When Purchasing Gift Cards this Holiday Season

ELLICOTT CITY, MD – Howard County Executive Ken Ulman warns Howard County residents to exercise care when purchasing gift cards this holiday season. Some gift cards can only be used to purchase goods or services from specific retailers (such as department stores, books stores or restaurants), while others can be used at a variety of locations (for example, all stores located in a mall). The Howard County Office of Consumer Affairs warns that consumer protection rules are different for these two types of gift cards, so it is important for consumers to think about the pluses and minuses of each before purchase.

“While giving gift certificates or gift cards can be great gifts that are convenient to buy, not all gift cards are created equal,” Ulman warns. “It’s important to understand what kind of gift card you are buying and what risks you may be taking.”

State law provides that “retail” gift certificates and cards sold by Maryland merchants cannot expire or be reduced in value by fees for four years from the date of purchase. Retail gift cards must also disclose any conditions or fees that take effect after the initial four-year period. These protections apply to all merchants who sell gift cards in Maryland regardless of whether the merchant is a national company or a “chain” restaurant.

Gift cards that can be used at multiple locations, however, are usually sold or underwritten by national banks that are not subject to Maryland law. Such gift cards commonly carry shorter expiration dates and/or charge fees against the card’s value under certain circumstances. For example, a bank or mall card may start deducting $2 per month “inactivity fee” if the value of the card has not been redeemed within a year after purchase. While bank-affiliated gift cards are required to disclose their fees and expiration dates, consumers need to look for that information before purchasing one and then make sure that the recipient understands those terms.

Consumers also need to make sure that they purchase the card from a reputable merchant regardless of the kind of gift card they buy. Avoid buying gift cards from unknown sellers through internet auction sites; such cards often turn out to be counterfeits. In addition, consumers should be careful when buying cards from merchants such as supermarkets who stock gift cards from a number of other stores. When buying a gift card under these circumstances, look at the card’s packaging to make sure that the “pin” or “activation” number for the card cannot be seen. Crooks have been known to copy those numbers and use them to make internet purchases after the card has been activated.

While most merchants who sell gift cards fully expect to honor them, there is always a risk that the merchant may suffer financial problems, putting them out of business. While a gift card sold by a Maryland merchant is prohibited from having an expiration date of less than four years, there’s nothing that guarantees that the merchant will be in business that long.

“If you are sending a gift card to someone in another part of the country, make sure that the company has not closed its stores in that area,” suggests Rebecca Bowman, Administrator for Howard County Office of Consumer Affairs. “Given this risk, I urge recipients to use their gift card as quickly as possible.”

Finally, consumers should remember that most retailers will not replace gift cards that are lost or stolen; therefore, gift cards should be handled and protected the same as gifts of cash.