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Nov 21, 2008 5:50 pm US/Central
Are Gift Cards Risky This Holiday Season?
CHICAGO (CBS) ―
An e-mail is making the rounds, warning consumers to be careful about buying gift cards from stores that are closing. Is it rumor or is it fact? CBS 2's Dorothy Tucker attempts to track down the truth.
For years, gift cards have been considered the perfect holiday present.
But the popularity is waning this season. Gift card sales are expected to drop 6 percent. Uncertainty in the economy is to blame.
An email circulating around the country warns consumers not to buy gift cards from stores that are closing after Christmas. Then it lists several popular chains.
Is it true? John Melaniphy charts retail openings, closings and bankruptcies.
"Well, the email is true in a sense that there are a number of stores that are closing additional units," he said.
However, Melaniphy says, the email is somewhat misleading because it doesn't put the closings in perspective.
"When you're a retailer that may have 4,000 stores, if you close 78 stores you're still going to honor your gift cards," he said. "You just might have to travel a little further if your local store is closed."
But if the company closes every store in the country, then the gift card is worthless, of course. Melaniphy's advice: Be selective when buying gift cards.
"I think some of the stronger sporting-goods retailers would be all right, conventional department stores," he said. "I would maybe be a little worried about the smaller retailers."
In light of the economic crisis, perhaps the best piece of advice is to use your gift as soon as you get it.
The same kind of advice applies to restaurants. CBS 2 is still getting e-mails from viewers who have Bennigan's gift cards.
Apparently when the restaurant chain went out of business, it stopped accepting gift cards, even though some franchised locations remain open.
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