Know your gift card: Fees, expiration dates, gone-tomorrow businesses

Graduation season has arrived with a gift-giving flurry that rivals Christmas. Proud relatives and friends sharing in John or Jenny’s “bringing home of the sheepskin” are bestowing gift cards on graduates in increasing numbers.

Next to cash, gift cards are the favored offering for graduating seniors, whether they’ve completed high school, college, technical school or another academic accomplishment. Last year, the small plastic wonders accounted for one-third of the $4.5 billion Americans spent on graduation presents, according to the National Retail Foundation.

Consumer enthusiasm for gift cards needs to be balanced with a few cautionary notes. The cards may have conditions attached to them that devalue their purchasing power.

A sample of gift-card pitfalls:

. Rules covering gift cards bought at banks are very different from those purchased at retail stores. Bank cards can use expiration dates and are allowed to charge late fees while retail stores headquartered in Maine are not. The reason is that banks come under federal government guidelines, which can override state laws

. Some gift cards carry service fees or late fees so high they will reduce an unused card’s value to zero over time.

. Despite regulations protecting consumers, obtaining gift card refunds from closed, bankrupt businesses is virtually impossible.

Mainers also need to make sure they’re buying gift cards from stable businesses, “not the spa or restaurant down the street that’s here today and gone tomorrow,” said Bonnie Delano at the State Treasurer’s Office in Augusta. Complaints regarding unredeemable gift cards made out by businesses that go bankrupt are “the ones I hear about most often,” said Delano, who works to get these items or their monetary worth refunded.

Maine-based businesses are required to turn over most of the monetary value of unredeemed gift cards to the state if they haven’t been redeemed after three years. There are some important details to this requirement, the most important one being that businesses have to remit 60 percent of the purchase price of gift cards to the state so that the state treasurer can hold the funds for the owner to claim.

Fortunately, Maine has put some checks and balances in place to protect consumers from tactics to devalue gift cards that may appear only in small print. A state law passed in 2005 bans dormancy fees or late fees being imposed on gift cards issued by businesses with home offices in Maine. Still, irregularities happen, sometimes because business owners aren’t aware of the regulations or because the gift cards are sold by businesses not headquartered in Maine.

“Our best advice is to be aware of what you’re buying when purchasing gift cards and to use them quickly,” said Delano.

So far, complaints regarding gift cards filed with Northeast CONTACT have been resolved quickly. Usually, it’s a matter of educating business owners to the law. In one case, a consumer was left with a gift certificate after a Maine-based franchise closed its enterprise in Bangor. Once contacted, the central office located in southern Maine quickly refunded the money owed on the gift certificate.

Of course, the Wal-Marts and McDonalds businesses can tack on extra fees and are not subject to state regulations. Yet most bigger companies honor their gift cards. If a business is from out of state and refuses to honor the gift card after an appeal is made, it would be worthwhile to file a complaint with the Maine Attorney General’s Office at 800-436-2131.

Consumer Forum is a collaboration, now in its 30th year, of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded nonprofit consumer organization. Individual and business memberships are available at modest rates. Interested and motivated prospective volunteers are always needed and welcomed to apply to help with our mission. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, Bangor Daily News, P.O. Box 1329, Bangor ME 04402-1329, or e-mail

contacexdir@live.com.