National Retailers Agree To Improve Gift Card Policies

Attorney General Spitzer said today that his office has obtained commitments from more than a dozen national retailers to amend their policies regarding lost or stolen "gift cards."

"I commend the retailers for working with my office to address concerns about the protections available to consumers who use gift cards," Spitzer said. "The action by these companies should set a standard for the entire industry."

Gift cards -- the modern equivalent of gift certificates – are a massive business in the U.S., accounting for more than $38 billion in sales last year alone. Individuals purchase the cards and give them to others as gifts or use them as reloadable pre-paid spending cards.

Many consumers are under the misconception that the gift cards enjoy the same legal protection as credit cards and debit cards. Although federal law limits the liability of credit/debit card holders who properly report loss or fraudulent activity, no such protection currently exists for gift cards.

However, Spitzer's office has received commitments from major retailers to provide new protections for consumers. Under the agreements, the retailers have agreed to reissue lost or stolen gift cards for those customers who can provide reasonable evidence -- generally a sales receipt plus either a credit card or a cancelled check -- that they were the purchaser of the lost, stolen or damaged gift card. Purchasers who do not have an original receipt can obtain a "transaction register" from their credit card issuer.

Spitzer said the agreements should help thousands of consumers nationwide who have had problems with lost or stolen gift cards.

The retailers that have now agreed to the reforms include: Best Buy; Borders; Walden Books; Circuit City; CompUSA; Disney Stores; Kohl's; Nordstrom; J.C. Penney; Eckerd; Musicland; Sears, Roebuck & Co.; The Sports Authority, Inc.; Target; Toys ‘R Us, Inc.; Bloomingdale's and Macy's.

Spitzer first became involved in the issue in June 2002 when his office received complaints from consumers about Home Depot gift cards that were lost or stolen. The consumers said that the company had refused to deactivate the cards and issue refunds.

The Attorney General's office settled the case with Home Depot, with the company agreeing to implement a nationwide policy governing the use of store-issued gift cards. The company now deactivates and replaces cards that have been lost or stolen provided that consumers present proof of purchase. Home Depot also now prints statements on the back of each gift card in both English and Spanish reflecting its change in policy to permit the cancellation and replacement of lost, stolen or damaged gift cards in appropriate circumstances.

Following the settlement with Home Depot, the Attorney General's Office began a review of other retailers' policies regarding gift cards and determined that many companies lacked policies to protect consumers.

This initiative is being handled by Assistant Attorneys General Stephen Mindell and Herbert Israel of the Consumer Frauds and Protection Bureau.

Individuals with questions about gift cards are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.