By Hilary Lehman
Daytona Beach News Journal
With holiday gift shopping, it's the thought that counts -- unless, that is, the recipient hates the gift that thought went into.
The modern solution? Gift cards.
Since gift cards came to be in the 1990s, replacing gift certificates, it's hard to name a major retailer that doesn't carry the customizable, plastic cash substitutes, and even technologically averse grandparents give them as the one-size-fits-all present of choice. With the National Retail Federation estimating Americans will spend $24.78 billion on gift cards this holiday season as the most-requested wish-list item, it appears they have replaced dollar bills as the go-to gift of convenience.
"I just don't think most managers come in with wads of cash now and start passing it out. First of all, it's kind of unseemly, even though, in essence, it's kind of the same thing," said Steve Kirn, director of the University of Florida's David Miller Retail Center. "It just doesn't seem like your grandma giving you the $20 bill."
But that doesn't mean gift cards come without problems.
Until recently, gift cards were often subject to hidden fees and expiration dates. State laws sometimes placed restrictions on gift-card issuers, but those laws varied widely, said Laura Lane, vice president of the unclaimed-property services division of The Keane Organization, which provides corporate risk and compliance services. "For the most part, consumers were left holding the bag," Lane said.
In 2009, the federal government instituted the Credit Card Accountability, Responsibility and Disclosure Act. Its more well-known restrictions were on credit-card companies, but it placed restrictions on gift cards, as well. Under the CARD Act, gift cards cannot expire before five years after issuance, and companies cannot impose fees on cards until one year past issue. It also requires disclosure of all fees and expiration dates on the card packaging.
With the bad economy, though, gift cards expiring is often a non-issue already, Lane said.
"People are pinching pennies," she said. "They're looking to spend a gift card."
Online gift-card exchange sites have popped up to meet the demand from customers who simply don't want to use the cards they've been given, offering trades, cash credit for turning in cards or cards for sale at reduced prices.
Kristin Donelson, who is vice president of marketing for the Plastic Jungle exchange site, said most people who choose to exchange their gift cards simply want something specific from another store or don't shop at the store their cards are from.
Sometimes, though, the gifts don't fit their interests at all.
"We hear a few really extreme cases of misguided giving, where a vegetarian gets a gift card to a steakhouse," Donelson said.
But the real winners in the gift-card invasion are the retailers, as consumers usually spend more money than is on a gift card at a store. It doesn't seem that the trend will end anytime soon, retail expert Kirn said.
"We've become a kind of plastic-accustomed society, and it's a nice tidy way to kind of purchase these things," Kirn said. "It's a matter of ease for the purchaser."
www.news-journalonline.com/business/money/consumer-news/2010/12/13/the-go-to-gift.html