I have not yet come across a sound reason why there should be fees or expiration on gift cards. First, by buying gift cards, consumers are essentially giving the card issuers an unsecured loan, on which they earn no interest, even if the card is not redeemed for a year or more. Second, if the company goes bankrupt, there is very little chance the money will be returned (except in a few cases, like recently with Linens and Things).

So, if consumers are taking on these risks by buying gift cards, why should they then be subjected to fees and expiration? They might as well change the gift card fee disclosures to read like this:

Dear Gift Card Buyer,

We really appreciate the unsecured loan you gave us. Together, you all gave us $97 billion in loans in 2007, up from $83 billion in 2006. You know we could use the extra cash, OneVanilla given all the talk of a recession. We thank you for not charging us any interest or fees on the loan. We will put your money to work immediately and generate great returns on it. You may even hear about all the kudos we will get from Wall Street due to our outstanding earnings (which will be helped by the money we get when your gift card expires). Heck, our CEO may even buy his third McMansion in the Hamptons after we reward him for making good use of your loan. A few house cleaning items:

  1. If you purchased the gift card from our website, we may charge you a processing fee, separate from the shipping charge, in order to get you the card that shows that we owe you money. Feel free to buy stuff in our store up to the amount of the loan (gift card value). But if you don’t hurry, we will punish you every month by charging you ridiculous fees. These fees can start as soon as six months into the loan. We may even start your fees as early as a month into the loan if we so desire. And remember, the fees will continue until the balance on your gift card reaches ZERO. Why? Because we can. Yes, your state legislatures are all complaining about this because it is an election year. Do you really think they will do something about this?
  2. Also, we have noticed from experience that some of you like to wait a long time, and we mean a long, long time to redeem your gift card. It takes a while for us to get your $100 gift card to ZERO if all we are charging is $2. 50 each month. So, we now have a better idea. We will charge you the $2. 50 for sometime and if you still don’t redeem your gift card by a certain date, say within two years, your card will expire. Once your card expires, we will get all the money left on the card. You are probably wondering if this is legal. Well, no one has told us it isn’t.
  3. And don’t even think about losing your card. We reserve the right not to replace lost or stolen gift cards. Yes, we know that if you lose your Savings account Statement or CD Certificate, the bank will replace it, but we are not a bank, so we can do whatever we want. If we feel generous, we may replace your gift card, but we will charge you a fee, up to $15 to teach you a lesson.
  4. Lastly, if you bought a bank issued gift card (like Visa, Mastercard, American Express, or Discover), then you better read the fine print and become familiar with fees like Transaction or Statement Copy Fee, Foreign currency Conversion Fee, Check issuance Fee, and Transaction Fee / Balance inquiry Fee. And one last thing; Don’t call the FTC because they may be willing to push for laws to limit fees on retail gift cards but they have not been willing to touch us, the bank issued gift cards. Why? Because our lobbyists are doing an excellent job.

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