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Governments Grab Unused Gift Cards July 1, 2009

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By ERICA ALINI

Some states faced with sinking tax collections and rising debt are going after unused gift cards that bolster their revenue.

South Carolina is considering legislation that would give the state the right to collect unclaimed gift-card credit. A similar measure in Texas to allow the collection of unused credit even from cards that have no expiration date passed that state’s House this spring and stalled in the Senate. Texas already collects unused gift cards with expiration dates.

Since the recession began, states have been aggressively tapping so-called abandoned property — anything from gift cards to dormant bank accounts and safety-deposit boxes. About half the states collect unused gift cards after a period of two to five years.

See details on laws, state by state.

States are “looking under every rock,” said Mary Bernard, a tax expert at Kahn, Litwin, Renza & Co., an accounting and business-consulting firm based in New England.

Each year Americans spend about $65 billion in gift cards — excluding bank-issued prepaid cards — but don’t redeem $6.8 billion, according to research by TowerGroup, a financial-consulting firm.

What happens to the unused amounts varies by state and company, but they often revert to retailers as income. States that collect abandoned gift cards require retailers and third-party gift-card processors to update a database keeping track of when a card is issued and when it is used.

The National Retail Federation said retailers have opposed efforts to extend states’ reach into unredeemed gift cards.

“We’ve never understood why the state considers this money abandoned property,” said Jim McGregor, director of government affairs at the Maine Merchants Association, a retail businesses advocate. Maine collects unused gift cards after two years.

Retailers are also unhappy about states’ attempts to go after gift cards that have no expiration date.

“One of the benefits of offering gift cards which never expire is that it affords the guest the opportunity to use them at any time,” said Target Corp. spokesman Eric Hausman. “The proposals under consideration would essentially impose an expiration date on our gift cards.”

Meanwhile, consumers are also turning up at cash registers to trade in long-forgotten gift cards for anything from groceries to designer clothes, said Scott Krugman, a spokesman for the National Retail Federation. Between states’ efforts and recession-strapped consumers, retailers are “getting squeezed,” he said.

Many retailers shift unused gift-card credits from a liability account to an income account, or use them to reduce operating expenses based on the assumption that the cards — even those that don’t expire — will never be used after a certain period of inactivity, according to TowerGroup’s Brian Riley, a research director.

Getty ImagesSome states faced with sinking tax collections and rising debt are going after unused gift cards that bolster their revenue.

Home Depot Inc. reported $37 million in revenue from unused gift-card credit in 2009, according to Securities and Exchange Commission filings. Last year, American Eagle Outfitters Inc. collected more than $12 million, according to annual financial statements.

States say the gift-card laws are intended to help consumers get their money back, not to line government coffers. They say they are better than companies at tracking down and contacting gift-card owners about their unused funds.

But most states are unable to attribute more than a small fraction of the abandoned property. Gift-card owners are particularly difficult to track because retailers usually sell them anonymously to protect consumer privacy.

The state of New York, which faces a $7.4 billion budget deficit, collected $9.6 million in unredeemed gift cards last year, according to data provided by the New York state comptroller.

At the close of the fiscal year ended in March, $691 million from the state’s abandoned-property fund, which includes anything from uncashed payroll checks to forgotten bank accounts, was transferred to the state’s general fund.

For many years, states cooperated with consumers to pressure retailers to eliminate so-called dormancy fees, amounts subtracted from unused gift cards. “Now the state is trying to capture those funds,” said Joe Ridout, consumer-services manager at Consumer Action, a consumer-education and advocacy group in San Francisco.

New laws enabling states to tap into gift cards stretch unclaimed-property laws away from their original purpose of reuniting owners with their lost goods, according to Robert Peters, managing director at Duff and Phelps, a business consulting and investment-banking firm.

When the owner is unknown, “there’s nothing much we can do,” said Ron Schubin, director of reporting operations for the New York state comptroller. New York returned to their rightful owners around $2,150 in unredeemed gift cards last year.

—Ann Zimmerman contributed to this article.

Printed in The Wall Street Journal, page A3

Tuesday, June 30, 2009

Despite Increased Popularity, Gift Card Spending to Drop January 14, 2009

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WASHINGTON, D.C — While more people than ever will be asking for gifts cards this holiday, shoppers’ price-conscious mentality will take a toll on the season’s most-requested present, according to new research from the National Retail Federation (NRF).

NRF’s sixth annual Gift Card Survey, conducted by BIGresearch, found gift card sales will fall nearly 6 percent this holiday season to $24.9 billion, down from $26.3 billion last year. Fewer people plan to purchase gift cards this year (53.5 percent vs. 56.6 percent last year) and gift card shoppers will be spending less overall on the cards ($147.33 vs. $156.24 in 2007), the research showed.

“Since gift cards never go on sale, some price-conscious shoppers will be passing up gift cards in favor of holiday bargains,” NRF President and CEO Tracy Mullin said in a statement. “Retailers may need to make minor adjustments to holiday plans as fewer people may be hitting the stores in January to redeem gift cards.”

The biggest gift card spenders this year will be men, who will spend an average of $156.98 on the cards, and Americans over age 45, who will spend $168.02, the survey said.

Preliminary gift card research conducted for NRF by BIGresearch found that the main reason shoppers plan to buy fewer gift cards this holiday season is because:
– They feel the cards are impersonal (22.7 percent);
– They would rather stretch their dollar by buying merchandise on sale (10.9 percent);
– They do not want to buy a card with expiration dates or added fees (9.8 percent).

Other respondents say they simply do not know which gift card a person would want (7.7 percent), while a small number of people say that they are worried the gift recipient will lose it (3.9 percent) or that the retailer will go out of business (3.1 percent).

Though gift card spending is expected to decrease, more people than ever will be asking for the cards this holiday season. According to NRF’s first holiday spending survey, released last month, 54.9 percent of consumers would like to receive a gift card, up slightly from 53.8 percent last year. Gift cards will be the most requested gift this year, followed by books, CDs, DVDs, videos or video games, and clothing or accessories.

“Most consumers have been holding back on spending for themselves all year long and would love nothing more than receiving a gift card that would let them buy whatever they want,” stated Phil Rist, vice president of strategy for BIGresearch.

The NRF 2008 Holiday Consumer Intentions and Actions Survey is designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey, which polled 8,758 consumers, was conducted for NRF by BIGresearch between Nov. 5 and 11. The consumer poll has a margin of error of plus or minus 1 percent.

The NRF is the world’s largest retail trade association, with membership that comprises all retail formats and channels of distribution.

Walmart Research Finds Women are Becoming More Practical With Gift Card Use This Holiday Season January 14, 2009

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December 16, 2008 6:00 AM ET

Female shoppers still want gift cards for themselves and children, but have different spending plans

BENTONVILLE, Ark., Dec. 16 /PRNewswire-FirstCall/ — Women clearly are the shopper-in-chief for the holidays and Walmart today unveiled new research on their gift card buying and spending plans this season. One in two women shoppers said they still plan to give gift cards this season and even more said they would like to receive a gift card. Additionally, the research found gift card redemption may be shifting more from traditional “wants” to everyday “needs” including groceries. Some shoppers also will choose to re-gift the bonus gift cards they receive with select purchases this year.

Conducted this month, Walmart’s survey of female shoppers — fielded by BIGresearch — found:

    --  Nearly 70 percent of respondents would like to receive a gift card
        this holiday to select their own gift;
    --  Nearly half (48 percent) of respondents would like to have a gift card
        for groceries, in addition to restaurants, discount and department
        stores;
    --  More than half of those shoppers surveyed (56 percent) plan to buy a
        gift card this year, and 18 percent plan to spend $40 to $50 on gift
        cards;
    --  When asked about spending, 54 percent of gift card purchasers agree
        children and teens will spend their gift cards on electronics, but
        that adult spending would primarily go towards apparel and accessories
        (44.2 percent) and food (40.4 percent);
    --  Nearly 30 percent of those surveyed said they would consider
        re-gifting a bonus gift card they receive with a purchase.

“Gift card wish lists are more practical this year,” said DeDe Priest, Walmart senior vice president, food division. “Walmart shoppers can stretch their gift card dollars further and make purchases that work best for family and future plans, all in one place.”

Walmart’s Gift Card Offerings

Because of Walmart’s strength and offerings, a Walmart Gift Card is expected to be more sought after this holiday season. Walmart is offering consumers the opportunity to personalize their gift cards for individual recipients. In-store and online, shoppers can find up to 50 Walmart Gift Card designs including: add your own photo, a holiday “snow globe,” scratch and sniff, and even a Christmas tree card that can be decorated. Additional Walmart Gift Card offerings include a variety of branded or “themed” gift cards, such as sports and new baby, as well as cards highlighting popular electronics and toys brands. Walmart Gift Cards also have no expiration date.

Starting this week, Walmart is offering shoppers bonus gift cards with select purchases,* including:

    --  Sony Blu Ray Player ($298) -- $50 bonus Walmart Gift Card
    --  Fuji 8.1 MP Digital Camera ($89) -- $10 bonus Walmart Gift Card
    --  Select XBOX 360 video games ($59.74) -- $10 bonus Walmart Gift Card
    --  DVDs including The Dark Knight, Kung Fu Panda, Iron Man and Wall-E
        ($19.96) -- $5 bonus Walmart Gift Card

eGift Cards Another Perfect Last Minute Gift

For those who delay Christmas shopping until the last minute, eGift cards from Walmart.com can be sent any time — even Christmas morning. An eGift card is emailed to a recipient within hours of the order, and can immediately be used to shop online at Walmart.com. There are several designs from which to choose as well. More information surrounding Walmart gift cards can be found online at http://www.walmart.com.

About the Gift Card Research

BIGresearch conducted an online survey of over 300 females across the country in December 2008. All respondents had shopped at Walmart over the past three months and of those shoppers, over 25 percent shop at Walmart at least once a week.

* Prices starting Dec. 14 while supplies last. Prices listed represent the majority of Walmart stores nationwide. Some restrictions apply, void where prohibited

About Wal-Mart Stores, Inc. WMT

Every week, millions of customers visit Walmart Stores, Supercenters, Neighborhood Markets, and Sam’s Club locations across America or log on to its online store at http://www.walmart.com. The company and its Foundation are committed to a philosophy of giving back locally. Walmart WMT is proud to support the causes that are important to customers and associates right in their own neighborhoods, and last year gave more than $296 million to local communities in the United States. More information about Walmart can be found by visiting http://www.walmartstores.com. Online merchandise sales are available at http://www.walmart.com.

SOURCE Wal-Mart Stores, Inc.

Copyright 2008 PR Newswire

Gift cards set to reward givers and receivers (restaurant news) December 17, 2008

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NATIONAL REPORT (Nov. 28, 2008) Amid less-than-jolly projections for holiday spending, restaurants are wrapping their gift cards with extra perks to tempt shoppers.

Many chains are offering such rewards as free food and separate gift cards for purchasers and independent restaurants are even banding together to offer gift cards, all in the face of forecasts for a weak holiday shopping season. This year the National Retail Federation expects total holiday gift card sales to decline more than 5 percent from last year. The federation added in a survey released last month that nearly 11 percent of consumers said they would rather shop for bargain-priced merchandise.

Restaurants are responding: Buyers of $100 in California Pizza Kitchen gift cards will each receive a $20 CPK Rewards Card; T.G.I. Friday’s is giving away $5 Bonus Bites cards with each $25 gift card purchase; and IHOP is handing out $5 coupons to any customer who buys a $25 gift card.

Higher-end chains are using a similar strategy. Ruth’s Chris Steak House said on its website that customers who buy at least $250 in gift cards will receive 10 percent of their purchase price in a bonus card. Another steakhouse operator, The Capital Grille, is offering the same deal for purchasers of at least $500 in gift cards.

Others are offering free food or other items. Papa John’s Pizza is giving a certificate for a free medium one-topping pizza to each customer who buys a $25 gift card, and BJ’s Restaurants is handing out special edition pint glasses to purchasers of $50 gift cards. At Jamba Juice, customers who buy a $25 Jambacard can get a free 16-ounce smoothie or 12-ounce breakfast item.

Smaller operators also are looking to score in the gift card game. Union Square Hospitality Group, whose portfolio includes such well-known New York restaurants as Union Square Cafe, Gramercy Tavern and Eleven Madison Park, is partnering with American Express in its holiday gift card promotion. Customers who use their AmEx cards to buy a $100 gift card will receive a $25 bonus card, USHG said.

Consumer cutbacks in gift card purchases may come from fear that the restaurants they choose to frequent will close before the cards can be redeemed. The industry has seen such bankruptcies or mass closures like at Bennigan’s, Ryan’s or Shells Seafood. According to last month’s National Retail Federation study, more than 3 percent of respondents said they would indeed cut back on gift card purchases for that reason. However, Orenstein said the Cleveland Independents program can offer peace of mind because each gift certificate can be used at several restaurants.

“There are always people left with gift cards they can’t redeem,” she said. With a Cleveland Independents gift certificate, she added, “If you can’t redeem it at your first choice, then you can redeem at your second choice.”

Ellen Davis, a spokeswoman for the National Retail Federation, offered up a bit of good news for restaurants, saying that the recent decline in gas prices could make consumers more likely to stop for lunch or a cup of coffee while they are out shopping. In addition, restaurant gift cards may be a more popular choice for holiday shoppers over other retailers.

“Dining out in a restaurant is an experience that many people have been [cutting back on] for many months,” she said, “so people may like the idea of giving a gift card to a restaurant because it provides an opportunity that they’ve been denying themselves.”

Shoppers buy gift cards for practicality, as some ditch the plastic altogether December 15, 2008

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BY JAMES HAGGERTY
STAFF WRITER
Published: Sunday, December 14, 2008 11:50 AM EST
Although researchers predict that gift cards will once again be the most popular holiday present this year, sales will be down from 2007 — due largely in part to worries about retailers who are hinging on financial trouble.

Sale tallies for certain types of cards will also be down because people are purchasing cards for items like gas and groceries as opposed to items considered more of a “splurge.”

Kathy Catling, front-end manager of Boyer’s Food Store, Hazleton, typically handles gift card sales.

While Boyer’s card sales have been about the same as last year, she said that the store’s Gift Card Center, which vends cards for chain restaurants and Internet retailers, hasn’t been used much.

“They’re not really moving,” she said.

“What we’ve got is a tidal wave of fear on the part of consumers and it’s reflected in gift card sales,” New York City retail consultant Howard Davidowitz said.

Sales of gift cards for the year will drop 9 percent from 2007, to $88.4 billion, according to the TowerGroup, a financial research firm based in Needham, Mass. Card sales connected with specific restaurants and retailers will total $59.9 billion, down from $70 billion last year, its research concludes.

Cards will be the leading gift purchase for the fifth straight year, according to a survey by Deloitte LLC, a New York-based financial and tax services firm. Deloitte’s sampling of more than 13,000 people indicates 66 percent of shoppers will buy them, down from 69 percent in 2007.

There is an exception to the downswing. People are buying more cards associated with consumable products, such as fuel and groceries, surveys indicate.

“Some retailers will see increases in the areas where the consumer is moving to,” said C. Britt Beemer, a retail analyst whose consulting and research firm gauges consumer behavior.

Sheetz Inc., Altoona-based chain of 350 stores that melds gas sales with quick food and convenience store services, benefits from the move toward cards for practical purchases.

“Card sales are up 28 percent over last year,” Sheetz spokeswoman Monica Jones said. “People are moving toward buying people gifts that they can use.”

Outside the comfort zone of gas, snacks and groceries, though, the frightful retail picture spooks some potential card buyers who see a fast-shifting landscape. November retail sales posted the weakest monthly performance in 39 years.

“Forty-six percent of people are concerned about buying gift cards because they weren’t sure about which retailers would be around next year,” said Beemer, whose firm queried 1,000 people recently about their holiday purchasing plans.

Troubling evidence crowds the regional retail front. Boscov’s department store chain and electronics leader Circuit City are emerging from bankruptcy. Housewares vendor Linens & Things, off-price merchant Value City, budget clothier Steve & Barry’s and women’s apparel vendor B. Moss are liquidating.

Consumers have lost $100 million in gift card value this year as major retailers vanished, according to TowerGroup data.

“The rule for the person who gets the gift card is, spend it immediately,” Davidowitz said. “The person who gets it has to understand it’s not FDIC-insured.”

The lost value of cards for defunct retailers hardly rivals the worth of unredeemed cards, which TowerGroup says totals $6.4 billion, down from $8 billion in 2007.

Some companies levy dormancy fees against the value of unused cards, eventually terminating their redeemable worth.

“The terms and conditions vary from card to card, so when you make the purchase you’re agreeing to those terms,” said Nils Fredericksen, spokesman for the state attorney general’s office. “Most chains have backed away from fees and expiration dates.”

Shoppers, who are losing wealth through the financial markets upheaval and have seen 2.7 million people lose their jobs in the last year, back away from cards for another, stark reason, Beemer said. More people opting out of card purchases are giving money gifts, his survey shows.

“Almost two-thirds are saying they are giving cash instead of gift cards because the person needs help paying their bills,” Beemer said.

Staff writer Jill Whalen contributed to this story.

jhaggerty@timesshamrock.com

Gift Card Buyers Seek a Personal Touch October 23, 2008

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Gift cards continue to gain favor as a practical gift-giving alternative. But to attract buyers, more retailers need to provide the option to personalize gift cards, according to a study to be released next week by the National Research Network.

The perception that gift cards are impersonal is the top inhibitor for consumers purchasing gift cards, the study found, with nearly half of respondents citing that as a factor. The August study polled 3,0007 consumers and was conducted online in conjunction with market research company Hartman Group.

“In order to increase sales while also helping gift cards stand out in the dense marketplace, marketers should focus on personalizing the gift cards,” said Keith Maladra, vp-consumer intelligence at the National Research Network, Chicago. 

Maladra said personalization would require a better understanding of the target markets and what appeals to them. He added, “For instance, gift card providers could customize gift cards for children by placing an image of a ‘cool kid’ on the card.”

Starbucks, Wal-Mart and Visa are among the larger companies that offer personalized gift cards. It’s done primarily via the Web, allowing consumers to put messages and pictures on the cards.

In 2006, consumers spent nearly 18% of their 2006 total holiday merchandise gift expenditures on gift cards, up from 13% in 2005, per the International Council of Shopping Centers.

The National Research Network study also found that half of gift card recipients typically spend more than the gift card amount when redeeming it. Additionally, 15% of gift card recipients spend less than the total gift card amount, giving the card issuer a benefit.

While an ailing economy may affect the monetary amount given in gift cards this holiday season, the study noted, over half of consumers said they plan to purchase at least one card. In the past year, respondents claimed to have spent $262 on gift cards, at an average of $52 per card.

“What we see now is that gift cards are still one of the perfect gift-giving solutions, but a third of respondents said they would not spend as much,” said Blaine Becker, director of marketing and communications at Hartman Group, Bellevue, Wash.

Becker said marketers could consider adding value to their cards this season, following in the footsteps of retailers that offered an additional 10% to 20% this summer when consumers were spending their tax stimulus checks.

Among other findings in the study:
- More females (60%) than males (44%) reported buying cards in the last year;
- The average number of gift cards consumers receive tends to correlate with household income. As household income increases, consumers tend to purchase more gift cards;
- Christmas and birthdays were cited as the top occasions for gift card giving;
- This holiday season, younger consumers are expected to buy gift cards, with 78% being between the ages of 18-24;
- Discount stores such as Wal-Mart and Target were the most popular gift card benefactors, with 42% of respondents reporting purchasing a discount store card in the past year. Restaurants came in second (26%), followed by clothing stores (21%).

“The gift card is a no brainer for almost any company,” said Jim Novo, a marketing consultant based in St. Petersburg, Fla. “They take very little space, so the revenue in terms of square footage is tremendous. And they are low maintenance. It’s a terrific way to extend the brand.”

Sept 4, 2008

-By Steve Miller

Gift Card Buying Trends Increasing in Hispanic Market October 23, 2008

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Gift card buying trends continue to increase each year. The gift card industry has been taking off for several years and each year shows a steady increase in number of cards purchased and the average amount spent per gift card. Also, surveys show that more people are eager to receive a gift card, which was once seen as an impersonal gift, than ever before. Over 50% surveyed said they wanted gift cards this season according to the National Retail Federation.

The gift card buying trends are also increasing rapidly in the Hispanic market. According to Comdata Stored Value Solutions, Hispanics, on average, received gift cards with the highest average value, $71. Comparatively to African-Americans and Caucasians, this is considerably higher with African-Americans averaging $60 and Caucasians receiving an average of $41.

“Our survey shows us that Hispanics are enthusiastic consumers of gift cards,” said Bob Skiba executive vice president and general managers of CSVS. “Hispanics represent an exciting growth area for retailers.”

The study also shows that 40% of Hispanics report buying gift cards for personal use, compared to 30% of Caucasians and 24% of African Americans. Another interesting note is that 69% of Hispanics surveyed reported spending more than the amount on the gift card. Hispanics also give gift cards to children more than Caucasians and African Americans for the purposes of rewarding their children as well as teaching them the value of money. Instead of giving children their weekly allowance, parents can use gift cards to reward their kids on monthly basis and feel a sense of responsibility by have a prepaid credit card, which looks the exact same as mom and dads’ bank card.

The numbers are certainly showing a very excited market for gift cards and specifically a rapid increase in buying from the Hispanic market. With gift card purchasing still climbing, these numbers will certainly continue increase.

Quality Time with Julian August 4, 2007

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Spending consecutive two Friday nights with Funny and Julian since Funny has to babysit Julian.  Used to be me and Funny’s sister quality time.  It’s becoming me, Funny and Julian’s quality time. 

The boy starts to talk to us and play with us more than before.  He even called Funny’s name now.  Try to make him remember my name as well, but he just doesn’t want to say “JoJoan.”  He used to cry everytime he sees us before when we started to babysit him.  Everytime he sees Funny, he knows that mom and dad are leaving and start crying.  Nowaday, we will watch movies and play toys together without him making any fuss at all.

Can’t believe the boy is walking and talking.  Funny speaks to him in Spanish and I speak to him in English.  He will reply my questions with simple answers like “ya” or “no.”  Saying simple words like “movie”, “uno”, “ya”, “no”, “train”…Coming to get you to play toys with him…

He is really in the fun stage to hang out… 

Toronto_2 July 21, 2007

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Mark walked into the breakfast with his new iphone.  I played with the phone all the way to the meeting and couldn’t let go.  It’s such a cool phone.  So jealous.

Rain in Toronto the first day, but the weather was so nice the next day. 

Angela is such a funny girl.  In her meeting notes, she said “Joan eats everything besides the last bite of her sanwiches and cookies,..A lot of girls actually do that!”  I wasn’t even aware of that.  Good to know…always saving the last bite….interesting…

The dinner was in a nice stake house.  Too bad I can only order a garden salad and a side vegi.  The stake smell just drove me crazy…So hard to be a vegi…such a limited selection…AT LEAST the wine was good…

Dr. G offered to be on my committee.  He said if it will help to have a industry person on the list.  He doesn’t mind to do that.  I wasn’t sure how to react to that one.  Doesn’t even think about that one yet since I need to come out with the research topics first…

It’s generally a good trip for me since I never had the chance to meet the whole team up there.  It’s good to get the personal touch with the project team and put the names and faces together.  I hope the relationship building will go a long way for getting the job done in the future.  Too bad Jason doesn’t make it this time…

Toronto July 19, 2007

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Flight got delayed.  Didn’t flight in until midnight.  This India driver stood right outside the exit and asked me to see if I need a taxi.  I said yes.  He took me down to the parking lot, picked up his car and drove me to the hotel.  Charge me like $60 ($10 dollar more than Mark told me).  I guess I forgot to negotiate before getting in his car.

It’s a really nice hotel.  Got a little suite with kitchen.  It’s very upscale and cosmopolitan just as it’s name said “Cosmopolitan Hotel.”  The taxi driver told me it’s a new hotel.  There is a CD player in the room and it’s playing the soothing music when you walk in.  Like the idea.

—————–

Feeling kind of hugry since I only had garden salad and potato soup from the airport…Starting to feel the downside of being a vegetarian.  Not much choice on the menu and vegi won’t hold up for long…

Time to go to bed…sleep will kill hunger…

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