Jeff Gelles
Consumer Watch
By Jeff Gelles
http://www.JewishWorldReview.com |
When Paul Kerr pulled an overlooked Circuit City gift card from his wallet recently, he discovered one of those amazing little ironies of modern life.
Although its plastic form would likely last for a millennium or two, its substance had apparently vanished at a rapid pace. Good for $150 when it was given to him, it was now worth just $124.
Kerr first contacted Circuit City, and then called to complain about what he'd been told: that the retailer had applied a "dormancy fee" when the card sat unused — and that the fee wouldn't have applied if the card had been issued in a state that banned such fees.
Kerr, it turns out, didn't get the whole story from Circuit City. And there was some good news for him in what was omitted: There's no hurry — now — to use what's left on his card.
In December 2003, the electronics retailer dropped the state-by-state variation and eliminated dormancy fees nationwide, spokeswoman Kathie Hess says. The change was also applied, though not retroactively, to older cards.
Hess says the goal "was to prevent confusion — to ensure that customers could have confidence no matter where the gift card was purchased."
Inconsistent public policy
Unfortunately, confusion persists. The problem isn't Circuit City's policies. It's the lack of a consistent public policy — a point highlighted this week when New York settled a lawsuit against one of the nation's largest mall owners, Simon Property Group, whose area properties include the King of Prussia shopping complex.
Circuit City, of course, wasn't the only company hearing from consumers who were irked by money-munching rules on gift cards. Nor was it alone in backing down. Starbucks and Barnes & Noble were among those taking similar steps.
Still, inactivity fees persist at other retailers. And a variety of charges consistently chip away the value of the latest trend in gift giving: the general-purpose gift card, such as those offered by mall owners and American Express.
The Simon Giftcard is a case in point: It bears the Visa logo, and is honored anywhere Visa debit cards are accepted. But that convenience has its price, including a fee to buy a card and a $2.50 monthly service fee starting six months later, whether or not the card gets used.
That service fee was what stirred a dispute with Eliot Spitzer, the New York attorney general better-known for going after big-time corporate fraud.
Spitzer said Simon was violating his state's consumer-protection laws by imposing the monthly fee so quickly and failing to adequately disclose various card rules.
Some costly features relaxed
Simon agreed to pay a small penalty. More important for consumers, it agreed to relax some of its cards' costliest features — although a key change applies only in New York.
Simon says it will extend the expiration date on all its cards to 18 months after purchase, from 12 months. And it will drop a 50-cent-per-call fee formerly imposed for calls to its customer-service lines.
But so far, only New York customers will benefit from the biggest change: Simon's agreement to hold off on charging the monthly service fee until a card goes unused for 12 months.
Simon was quick to point out that the settlement doesn't apply to its practices elsewhere. And for consumers, that's the rub.
A few states, such as California and Washington, ban dormancy fees on cards issued by individual retailers. But most, including Pennsylvania and New Jersey, have weaker protections. And the issuers of general-purpose cards typically argue that they are exempt from state laws, anyway.
So far, proposals to set a national standard limiting gift-card fees haven't gone anywhere in Congress.
Until lawmakers get a better handle on the problem, the only answer is the traditional one: Buyer — and recipient — beware.
Jeff Gelles writes the ConsumerWatch column for The Philadelphia Inquirer. Comment by clicking here.
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