Sunday, November 18, 2007LAURA GUNDERSON

The Oregonian

Gift cards for nearly every retailer and restaurant chain are for sale in outlets ranging from gas stations to high-end boutiques. That’s earned gift cards a top spot on many shoppers’ lists.

It’s also earned them a little scrutiny from Consumer Union, publisher of Consumer Reports.

The reporting of Anthony Giorgianni, the magazine’s associate editor of finance, based in Yonkers, N.Y., helped lead the consumer advocacy group to take a strong stand against some gift cards. Consumer Reports ran a full-page ad in The New York Times in the form of a letter to consumers: “Dear Shopper, Last year shoppers like you were out $8 billion because of unused, lost or expired gift cards. Easy money for retailers. Lost money for you.”

Still, in a survey released for the official start of the holiday shopping season the day after Thanksgiving, the magazine found 62 percent of readers plan to give gift cards this year. Women, the survey showed, rank them as favorite gifts, while men rank them third.

Giorgianni provides some insight — and prime examples — that led to the stern missive.

1. So when it comes to gift cards, which are the worst offenders?

“The bank-issued cards. Obviously, it depends on your point of view, as there are benefits to the bank-issued cards; they can be used in many more places. Retailer cards restrict recipients to shop with that particular retailer, or maybe an associated company or restaurant.

“But the bank cards are so onerous when it comes to fees and expiration dates and other gotchas, we’re actually recommending that consumers stay away from them.”

For example, he said, the iCard gift card imposes a $25 fee every six months if the card is not used and the Giftcards.com card by Visa charges 35 cents for each purchase.

“You’re saddling the gift recipient with lots of gotchas and fine-print details that no one really wants to be saddled with.”

2. Are retailer gift cards much better?

“They do tend to be less burdensome with fees and other concerns, but that doesn’t mean that you should assume that there are no problems with those cards.”

For example, he said, the Macy’s card expires two years after you last add money to it and the Red Lobster Seafood Restaurants card and the Southwest Airlines card can’t be replaced if they’re lost.

“The American Airlines card can’t be used through a travel agent at ticket counters or on flights originating out of the United States, and Starbucks cards aren’t always honored at its kiosks in book or grocery stores.

“Also, some cards restrict where you can shop with them. The CompUSA gift card, for instance, can be used in stores, but not online.

“That led us to an important tip: If you’re giving a retail gift card, be sure the person shops at that store or has access to that store.

“Keep in mind, too, that if a store mostly sells things $50 and up, you shouldn’t give a $25 gift card. Then you’re requiring them to add their own money before they can buy something. That’s annoying.”

3. How can consumers research cards they want to buy?

“Sometimes they make it difficult. When we tried to look at some of the gotchas, some of the requirements were not easily accessible. In some cases, we had to look at the retailer’s Web site and read frequently asked questions and the terms and conditions and even then, we might find two different things.

“That’s why we recommend that consumers don’t buy cards in the store. We tell people to go back home first and be sure you understand what all the requirements are, especially if it’s a bank-issued card.

“It gets so bad — with each card having different rules and stipulations — you need some kind of gift-card tracker,” Giorgianni joked, “a filing program that would pop up reminders when cards are getting close to an expiration date or a time when a fee will be applied.”

Ultimately, he said, the rules can favor gift-card issuers.

“We came up with a big figure: $8 billion in unused gift cards,” he said. “If that’s the case, even if people like getting them, they’re not really using them.

“In 2006, Best Buy alone gained $43 million in revenues from gift cards that were never used.”

4. Gift cards are fast, easy and some people love them, so what’s your best advice for folks who still want to buy them?

“When you get a card, use it as fast as possible — even if it doesn’t have fees and expiration dates. If you lose it, it can be a pain to replace and will cost money, assuming it can even be replaced.

“To get a replacement, most retailers require a receipt, so be sure to give the receipt along with the gift card.”

If you have other big issues with gift cards, he said, you can report the retailer to the Better Business Bureau or — if it’s a bank-issued card — to the correct regulator. Also, check out the February 2007 publication of the federal Office of Thrift Supervision (www.ots.treas.gov/docs/4/480923.pdf).

Have you ever forgotten a needed present and given a gift card?

“No. Nothing says, ‘I didn’t want to spend the time thinking about what you wanted’ more than a gift card.

“And I’ve never received one. People know better.

“Just give me a sweater and I’ll be happy. By April, we’ll have to fill out income tax returns and all that. Let’s not have to keep track of all this gift card business as well.”

Laura Gunderson: 503-221-8378; lauragunderson@ news.oregonian.com