Show Gift G ift card holders M might be out of luck Jerry Hirsch Los Angeles Times On Wall Street lawmakers are talking about how toxic debt threatens banks and lending Out Outon Outon Outon on Main Street shoppers better start thinking about toxic gift cards from companies that could go bankrupt They wont won't be bew w worth rth the plastic they are printed on Theres There's a new realization that holding a gift card from a troubled retailer is like having a bank account without insurance Its It's not an idle worry Shoppers spent an estimated billion on gift cards at retailers last Christmas season according to the National Retail Federation I am very wary of gift cards this year and do not plan to use any of them at all during the holiday season I simply do not trust the companies unless they put on a label saying that they are fully returnable at face value said Dr Richard Glassock of Laguna Niguel Calif Already some big retailers have filed for bankruptcy protection leaving gift card holders with millions of dollars of what the Bankruptcy Court considers unsecured debt Consumers Union said that when Sharper Image filed for bankruptcy protection this year it left an estimated 20 million on unused gift cards and andI I maybe as much as 40 million when merchandise certificates and related promotional cards were included At first Sharper Image said it would not honor the credits Later it successfully petitioned the court to allow it to accept gift cards if consumers spent twice the value of the gift card on a single transaction Gift card holders could lose more than 75 million just from store and restaurant closings in 2008 said Brian Riley senior analyst at Tower Group a consulting company The only way that number will change is up Riley said Consumer groups are worried about how little shoppers are protected when spending all that money In September a coalition of organizations asked the Federal Trade Commission to protect shoppers from losing money on gift cards when retailers file for bankruptcy protection It said retailers should be required to place money from gift card sales in a trust account that would be used to honor the cards if the merchants continued operations under the protection Court Consumers Union Consumers Federation of America National Consumer Law Center and the advocacy group US U.S. are all behind the proposal FTC spokesman Mitchell J. J Katz said the agency had received the petition and we are determining what our response will be Unless the federal government steps in and regulates the industry shoppers will lose the value of their gift cards when a a merchant files for bankruptcy The company can petition the court to allow it to continue to accept its gift cards but the bankruptcy judge has the option to reject such sucha a petition which would leave the cards worthless Giorgianni said In those instances the only recourse for shoppers is to file a claim along with other creditors In cases in which a company is reorganized most owners will receive court authority to honor the cards as a way to maintain goodwill with c n ro VU and d drive customer traffic said Marty Zohn a bankruptcy attorney with Rose in Los Angeles But in outright liquidations shoppers will be out of luck in most cases he said State laws have proved ineffective in m protecting gift card holders h in in bankruptcies said Giovanni Giorgianni of o Consumer Reports That's why why Goners Cons Consumers Union is recOmmending that people ople avoid gluing giving gift cards this C Christmas season 1 t I |