When Gift Cards Expire Everyone Loses

Gift Card Expiration Date

This guy let his gift card expire.

“Oh, but this gift card has expired. Sorry.”

Don’t you hate hearing those words?

I had that happen to me this morning when I was taking my favorite three girls (wife and two daughters) to Einsteins for a bagel. The Einsteins breakfast bagel sandwiches are excellent, by the way.

Anyway, we were partly lured to Einsteins because of a $5 off gift card we had. A family member had given us this card as a gift.

Back at Einstein’s…we made our selections and went to the register to pay. We hadn’t noticed, but the gift card had expired on 1/31/2011. The cashier kindly rejected our gift card, we paid, and ate our bagels.

It was a great morning otherwise. But I couldn’t help reflect on the negative experience with the gift card. Two things bother me about the expiring gift card:

How Expired Gift Cards Affect Customers

1. The consumer isn’t rewarded for being “incentivize-d”. We went to the store partly because we thought we were going to save money with the gift card. We didn’t notice the fine print of the expiration date. Our fault, totally.

However, shouldn’t a business be more interested in creating a satisfying customer experience? We’re coming in, with our hard earned cash to spend on their business. They treat us like we lost. “Oops. Sorry. You fail.” Well, I say the restaurant failed, as I’ll be less likely to deal with them in the future.

2. The gift giver isn’t rewarded for their spending. In this case, I believe the $5 card was a promotional “add-on” gift card attached to a purchase of a $20 gift card. You’ve seen the offers: buy a gift card for someone else, and get this bonus card for yourself.

If the giver meant to give us the card and for us to experience a money-saving meal, then she’d be sorely disappointed to find out that it was worth $0 for us. She essentially gave us something of $0 value. Einstein’s took away her ability to give.

Maybe I’m being a bit dramatic there, but you get the point: the consumer is given a reason to dislike the company they were trying to support.

Do Expired Gift Cards Help Business?

I don’t know much about corporate finance or marketing budgets, but what purpose does an expiration date serve for this company? How many people actually bring a gift card in after expiration? Maybe 5% of those with cards?

I would bet that 75% of gift card recipients use it before expiration, and another 5% try to use it after. The other 20% never think about it, lose it, or for whatever reason never get around to using it. So this company is risking a negative customer experience so they can save on the cost of 5% of their gift card budget? Doesn’t make sense to me.

Gift Card Expiration Laws

With the signing of the CARD Act of 2009, the laws around gift cards changed. The regulations regarding gift cards actually came into effect August 22, 2010. They affected expiration date and fees associated with gift cards. The main provisions of the law:

  • Gift cards can have an expiration date, but it can’t be sooner than 5 years.
  • Inactivity fees and other service charges can only be applied to cards older than 1 year.
  • The law covers gift certificates, store gift cards, and general-use prepaid cards.

The card we received was obviously given out prior to August 22nd. It will be interesting to see how retailers and banks treat gift cards in the coming months and years. I suspect that they and their customers will be a lot happier.

(photo: Rob Boudon; source: all things gift card)



Last Edited: July 28, 2011 @ 10:56 am
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. It is a terrible feeling to know that you let a gift card expire. I have done this. I feel bad for myself and the giver of the gift. It would be nice if they never expired.

  2. I am super paranoid about this, I always use gift cards within a week of getting them.

  3. 20 and Engaged says:

    I hate that feeling. I usually get gift cards for places I rarely go so I have to go out of my way to go spend it. By the time I’m ready to use it, it’s not valid anymore :(

  4. michael lee says:

    If you let a gift card expire that most likely means the gift card was for a store selling stuff that you really didnt need all that much. I can’t remeber off the top of my head, but I have seen a TV commercial for a company where you can redeem your unused gift cards for cash. Anyone know what I’m talking about?

  5. Jenna, Adaptu Community Manager says:

    I had a similar experience earlier this week with a Groupon. The deal expired and the company was closed on that day! I called and left a voicemail but still haven’t heard a response. Definitely not going to get my business in the future.

  6. lot I have learn from this post. I have a card from B&N, two years old, I thought its expired. Now I can use it