Editorial: The trouble with gift cards

Saturday, Dec. 24, 2005 | 7:57 a.m.

A small envelope with a gift card inside is fast becoming more preferable than a large present containing a surprise that could be tacky or not to one's taste. This is evident from the amount of cards being sold. The National Retail Federation estimates Americans will have spent $18.5 billion on gift cards this holiday season, a 6.6 percent increase over last year.

What many purchasers and recipients do not know, however, is that gift cards are apt to have expiration dates, and that many of them begin losing their value if they are not redeemed quickly.

Congress has shown little interest in setting a national redemption standard for gift cards, but that may change. Reps. Joe Barton, R-Texas, and Charles Bass, R-N.H., have asked the Federal Trade Commission to review gift-card policies and report its findings by Feb. 17 to the House Energy and Commerce Committee, chaired by Barton.

We recommend that the committee also review Assembly Bill 19, a law passed this year by the Nevada Legislature that went into effect Oct. 1. The law requires gift cards to display either the date of expiration or a toll-free number the recipient can call to get the information. The law also protects standard retail gift cards against depreciation for one year after purchase, and limits depreciation after that to $1 a month.

The Nevada law, pushed by Assemblymen David Parks, D-Las Vegas, and Joe Hardy, R-Boulder City, is one of about 15 state laws around the country that regulate how gift cards are sold.

Since consumers began complaining about the cards' diminishing values a few years ago, many retailers have dropped expiration dates and fees on their own. But many have not. It's still "buyer beware" in the gift-card market. We believe that the FTC report should result in a federal law setting a national standard for gift cards.