What About the Change?

Maine is the latest state to come to the rescue of consumers tired of feeling pressured to spend more than a gift card’s value to use up the often small balances left.

State Rep. Deborah Simpson, D-Auburn, has submitted a bill that would require merchants to refund that money. If enacted, the law, LD 2181, would allow consumers to receive refunds on balances of $5 or less if they appeared in person at the merchant that issued the gift cards to collect the money.

The Maine bill rides a small but growing wave of laws being proposed or enacted across the country that allow consumers to cash out the unused balances. In 2006, an estimated $8 billion in gift cards went unspent nationally.

The bill has already drawn fire from some retailers and was expected to reach the Maine assembly floor for a vote this month, Travis Kennedy, a spokesperson for Simpson’s office says.

“We’re not expecting it to fly right through,” he adds.

As of Jan. 1, 2008, Californians can collect balances under $10. Those in Washington state and Montana can cash out balances under $5, and Vermont permits consumers to get refunds on balances less then $1.

Even though Maine law prohibits expiration dates on gift cards, under the state’s unclaimed property law, gift card balances unused after two years must be reported to the state’s unclaimed property program. The merchant gets 40% and the state gets 60%.

The Promotion Marketing Association takes a neutral position, with a sympathetic view of both sides of the issue.

“The PMA understands that consumers may want to get small unredeemed portions of their gift cards back on occasion,” says Ed Kabak, chief legal officer for the PMA. “At the same time we understand that these transactions impose administrative costs to the people selling them.”

Those fees include the costs of the cards themselves, activation and maintenance fees and other expenses.

The National Retail Federation said it typically gets involved in federal, not state, policy issues.

Some experts predict that bills requiring merchants to refund unused gift card balances will not catch fire like the national drive to enact legislation to eliminate expiration dates and dormancy fees did.

In the promotional and incentive world, $5 gift cards are a popular giveaway to encourage trial or repeat business and also are typically given to employees as incentives.

RK Incentives represents nine brands that all use $5 gift cards.

“Since we sell these at a discount in bulk, we’re not in the business for everyone who gets the gift card to go return them for $5,” says Rich Killian, president of RK Incentives and past president for PMA’s Incentive Gift Card Council.

“We want to stimulate interest in the brand. We want them to use the card at the retailer and enjoy the reward.”

For more articles on retail marketing go to www.promomagazine.com/retail

GIFT CARD FACTS

• 42.6% of gift card recipients had redeemed 0% of the cards they received as a holiday gift as of Jan. 8, and only 18.4% had redeemed the entire value of the card
• 52.8% spent additional dollars beyond the value of the card
• Respondents ages 45 to 54 bought the most cards (2.78)
• Recipients ages 25 to 34 received the most gift cards (2.16)
• Women purchased an average 2.53 cards in the recent holiday season, while men purchased 2.48
• Top five types of gift cards purchased
  Department store: 33.8%
  Restaurant: 28.5%
  Bookstore: 16.6%
  Electronics store: 15.9%
  Discount store: 14.3%
• 72.9% of gift card purchases were made at the store where the card can be used

SOURCE: BIGRESEARCH COLLECTED THE DATA FROM JAN. 2 TO JAN. 8 AS A PART OF ITS JANUARY CONSUMER INTENTION & ACTIONS STUDY.