AG Coakley Reminds Consumers as Holiday Shopping Starts: "Know Your Rights and Shop Wisely"
"At holiday time, as always, it is important for consumers to know their rights and shop wisely," said Attorney General Coakley. "Gift certificates and gift cards are convenient and can make great gifts -- but you want to be sure to learn about applicable restrictions, and pass along that information to the recipient of your gift."
1. What protections do I have when buying a gift certificate or gift card in Massachusetts?
- Under Massachusetts Law, a gift certificate or a merchandise credit must be redeemable for 7 years from the date of issuance. The seller must indicate the date of issuance and expiration date on the face of the certificate, or, if buying an electronic card with a banked dollar value, the expiration date must appear on the printed sales receipt. If an expiration date is not provided, the gift certificate or gift card should be good forever.
- Once a consumer redeems a gift certificate or gift card for 90% of its value, the balance is redeemable in cash. When a gift certificate or gift card, by its terms, allows the purchaser or holder to add value, the purchaser or holder of a gift certificate must make an election to receive the balance in cash or continue using the gift certificate or card once it has been redeemed such that the value remaining is $5.00 or less. A gift certificate with a zero balance is void.
- State law, however, does NOT apply to gift cards issued by a national bank, even though these cards may be sold by an entity other than the bank. For instance, certain mall gift cards may not follow the seven year rule and may also charge fees, because the cards are issued in conjunction with a national bank. National bank-issued cards may be redeemable for a shorter period of time-five years. These cards may also have fees attached that will diminish the value of the card over time-some have monthly "maintenance" or "dormancy" fees that may kick in when the card is not used within a few months; they may also have fees assessed for checking on the value remaining on the card; lost or stolen card fees; or replacement fees if the card expires by its own terms but you still have value remaining on the card you want to use. These fees must be disclosed to you.
- Read all accompanying literature that comes with the card or visit the website of the company you are purchasing the card from to ensure that you know what you are getting. Be sure to provide all of this information to the person to whom you are giving a gift card or gift certificate.
2. What Types of Return Policies Can A Store Have?
- A Massachusetts retailer can typically have any refund, return or cancellation policy it wants, but that policy must be clearly and conspicuously disclosed to the consumer prior to the conclusion of the transaction. Many retailers provide the disclosure by a posted policy at the register or service desk.
- If a return policy is only listed on the sales receipt, that is not considered clear and conspicuous prior disclosure, as you only get a receipt after the sale is completed.
- Restrictions in return policies do not apply to defective goods-goods which cannot be used as intended, such as the toaster that will not toast or a television that does not get a picture. The store is required to give you a choice of a refund, repair or replacement.
- Be sure you know the store's return policy, so you can tell your intended gift recipients. Many stores offer "gift receipts" without the price on them so a recipient can return or exchange the gift.
3. How Can I Protect Myself While Shopping Online?
- Only do business with companies you know. If you contemplate doing business with a company you are not familiar with, research where the company is located and determine whether they have a good reputation with consumers. Consumers can also check with the Attorney General's Consumer Hotline by calling (617) 727-8400.
- Only place orders on websites that offer secure transactions. If you make a purchase online, you may want to pay with a credit card, as it gives you the most consumer protection, including the right to dispute a charge if the item is not as represented.
- Check the business's website for Return Policies and Delivery Policies. If the website does not provide information about delivery dates and returns, be cautious about proceeding with the purchase.
- If it is important to you to get a gift to someone by a particular date, order as early as possible and check the delivery dates specified by the site.
- If you are doing business with a company outside the U.S., know how much you are paying. Are the prices stated on the website in U.S. or foreign currency? Research contact information for the company. It is especially important to note that even if you are making purchases with a credit card, consumer protections may not extend to purchases made outside of the U.S. The general limit for consumer protections on credit cards is within your state, or 100 mile radius of your home, though some credit card companies will extend those protections-ask first, shop later.
- Federal and state laws protect consumers from fraudulent use of credit cards and debit cards. You are only responsible for $50 under state law if your credit card has been used for purchases you did not authorize. Some credit card companies actually provide for zero liability for unauthorized use.
- Online Auctions make it difficult to know exactly who you are doing business with. Check out the website's consumer protection policies-many offer insurance or other assistance if you are a victim of fraud. Pay for your purchases with a credit card or an electronic payment service which provides buyer protections.
4. What if the retailer I buy a gift certificate from were to go out of business?
- In some, but not all cases, you may be able to receive some reimbursement for the value of the gift certificate.
- If the retailer files for the protection of the bankruptcy court, you should file a document called a "proof of claim" with the court. Bankruptcy may allow for the payment of claims depending on the assets available.
- If a company has announced that it has filed for Chapter 11 bankruptcy and is "reorganizing," the company may ask the court for the ability to honor gift certificates. It may be in the best interests of a company to maintain goodwill if it wants to continue operating.
- If a company files for "liquidation" in bankruptcy, through Chapter 7, there may not be assets available to pay off all or even some of the value of consumer gift certificates.
- If the retailer does not file for bankruptcy, but simply closes, that does not necessarily mean that you won't be able to use your gift certificate. A business may file in state court for an "assignment for the benefit of creditors," or may otherwise provide for a way to transfer the value of a gift certificate to another location or to someone who buys the customer list.
- If a business were to unfairly take advantage of consumers, the Attorney General's Office may also bring a legal action seeking recovery of the value of unredeemed gift certificates or gift cards.
5. My retailer is "liquidating," is it safe to purchase products from it?
- If a store is liquidating, it may mean that someone is selling off some or all of its merchandise and that they may or may not be going out of business. Ask the retailer what its future plans are and what its return policy is. In addition, you may want to ask for a copy of the original receipt as well for your own records.
- Never buy a gift certificate or gift card from a seller saying it is liquidating unless you know what that means-the business may not be there tomorrow, and you may be out of luck.
- If you contemplate buying something at a "liquidation sale," do your homework first. Compare prices before you buy, as you may not be able to return purchases. A retailer in liquidation can still have any return, refund, or cancellation policy it wants, as long as those policies are disclosed before the purchase is made. While it may not accept defective merchandise from return, if the store is closed, that policy will not be useful to you.
Remember, comparison shop first, consider alternatives to gift certificates and gift cards if you are concerned about how long they will hold value, and be sure you know the merchant's return, refund and cancellation policies. Be sure to let the gift recipient know all of these things too.
Consumers that have questions about retail laws in Massachusetts or wish to make a complaint against a business should contact the Attorney General's Consumer Hotline at (617) 727-8400. The Attorney General's Website offers additional tips on retail rights and consumer protections.