Gift cards have never been more popular. Turned out in multiple colors, designs and denominations, they're available for sale on the counter next to the cash register or on a nearby display.
As much as $1 of every $10 spent last Christmas was on one of those plastic cards that allows recipients to chose their own gifts from the store.
But while gift cards have become more accepted by givers and receivers, the fine print on back has not.
A confusing array of rules about expiration dates and fees among national retailers has drawn the ire of consumers and the attention of lawmakers.
State legislatures around the country have begun passing laws to regulate the cards and gift certificates, their paper predecessors. Others, including Maryland, intend to take up the issue this year. Faced with growing animosity, some retailers say they will change policies that make the cards useless or diminished in value after a year or two.
"It's thievery, and I don't understand how people get away with it," said Phil DeFlavis, who owns a Perry Hall hair salon and supports the Maryland bill that would ban expiration dates on the cards. "Cards and certificates should be the same as cash."
DeFlavis said he has been in business for 37 years and would honor any gift certificate issued over the years. But he finds that other local merchants do not return the favor.
Several years ago, some of his employees gave him $200 worth of gift certificates for shops at White Marsh Mall. They expired in six months, and no store would honor them when he tried to cash them in after that period, he said. He has avoided buying gift certificates or cards since. The mall's manager says merchants there now honor expired certificates.
Most recipients of holiday gift cards in December used them within weeks, but a few held on to them or did not spend the entire balance. Some estimates put the unused balances nationwide in the billions of dollars.
A consumer movement over gift-card rules began in California in 1997, when that state banned expiration dates on gift certificates. Another law passed there last year specifically banned expiration dates on the cards and limited "dormant account" fees that typically apply after a year or two.
Since then, other states have taken up the issue.
Maine, Massachusetts and Connecticut banned or extended expiration dates. More than a half-dozen other states have restrictions. A few states require clearly displayed expiration dates, limited fees and replacements for lost cards with proof of purchase. Some federal lawmakers are also considering bills on the subject.
"It's like giving someone $100 and then taking it away, or taking it away a little at a time," said state Sen. Katherine A. Klausmeier, a Baltimore County Democrat who introduced the bill that would ban expiration dates in Maryland. "That's people's hard-earned money. They're taking advantage of the public."
National retailers have begun lifting some of the rules, perhaps to avoid dampening enthusiasm for gift-card buying.
Amazon.com, the online retailer, reported selling 70,000 of the cards in one day before Christmas. Retail analysts estimate that up to 10 percent of the $20 billion spent during the holiday season was used on cards, possibly doubling the previous year's gift-card sales.
Sears and bookseller Barnes & Noble were among the first to end expiration dates on their cards, and others followed, said Frank Jones, a Baltimore lawyer who specializes in retail and Internet issues. "California is so big, it has so many consumers, it affected industry standards," said Jones, an attorney with Whiteford, Taylor & Preston LLP. "Retailers thought if the law is heading that way, and they could generate consumer good will, why would they want an expiration date?"
Accounting problems prompted retailers to place expiration dates on gift cards in the first place, Jones and other experts said.
After selling a card, stores cannot log the revenue until the card is redeemed. Retailers wanted a defined time after which they could clear their books. Surveys have found that 5 percent to 14 percent of cards are never redeemed, Jones said.
Many retailers have hired third-party companies to administer their gift-card programs and deal with bookkeeping problems.
Despite all the confusion generated by the fine print and the varying state laws, gift cards have not translated into a barrage of complaints. The Maryland Attorney General's Consumer Protection Division reported six complaints about cards or certificates last year.
Legal experts say expiration dates are not against the law in most cases if clearly displayed. And some retail analysts argue that it might not be fair or practical to require stores to honor them forever, or limit fees, when there is a cost for them.
Kurt Barnard, president of Barnard's Retail Consulting Group in Upper Montclair, N.J., said most cards are used within weeks. Expiration after a year is reasonable, he said.
"Some people hold on to them if they want, say, spring fashions and the temperature is zero outside," he said. "They wait a few weeks or months, but should the store be required to be the custodian of someone's money without benefit for too much longer than that? Bans are well-meaning, but they are a big can of worms."
Unused gift-card balances aren't like a silver dollar that goes into a coin collection and never gets spent. In some states, they're treated like a long-dormant checking account, and the state governments take the money as unclaimed property after cards expire. Other states, including Maryland, allow retailers to keep the balances.
Many retailers initially charged fees to consumers who failed to use the cards quickly enough, such as a $1 to $2.50 after a year or two. They wanted to coax shoppers into spending the balances, said J. Craig Shearman, spokesman for the National Retail Federation, an industry trade group.
"If they don't, the [card balances] are sucked off into the black hole of government in most cases, and the retailer doesn't benefit and the consumer doesn't benefit," he said. "So what's happened in the last two years or so, since some states don't allow it anyway, is retailers have taken the lowest common denominator approach and said 'OK, cards won't expire.'" Companies that don't have expiration dates on their cards but charge fees if the cards aren't used within a year or two include some of the biggest names in retail.
Blockbuster charges $2 a month after 24 months of nonuse. Barnes & Noble takes $1.50 a month after 12 months. The clothier J. Crew charges $2.50 a month after 24 months. And Wal-Mart, the nation's largest retailer, charges $1 a month after 24 months. Starbucks takes $2 a month after 12 months, but the company plans to stop charging the fee.
Target, Gap and Home Depot are among companies whose gift cards don't include fees or expirations.
"A way of looking at it is through the customers' eyes. 'I spent $200 on a Home Depot gift card, and I've been busy or out of the country or I forgot it was in my wallet. Should I be punished?'" said Don Harrison, a spokesman for Home Depot, the Atlanta-based home improvement chain. "We're not in the business of punishing our customers."
Some chains, including Outback Steak House, say they honor cards even if they have expired. A spokeswoman for the Restaurant Association of Maryland said most of its 3,000 members would probably honor an expired certificate. The group does not oppose state legislation to outlaw gift-card expirations. The statewide association sells a gift certificate good at about 750 restaurants in Maryland. They expire in a year.
"Customer service is very important," said Alison Jessie, the association's director of marketing and communications. "They don't want a person to be turned away. They want them to eat in their restaurants."
The best way to get around expiration dates and fees is to use gift cards right away if you get them and don't give them to just anyone, said Gail Hillebrand, a California attorney for the consumer rights group Consumers' Union.
"Read the back of your cards," she said. "And think about the person you're giving them to. You might be better off giving a check."
Its cards never expire and can be bought online or in stores. They are good at The Gap, GapKids, babyGap, GapBody, Gap Outlet or online. The cards may be redeemed for cash when the balance is $5 or less
The clothier's cards never expire, can be used online, at stores and for catalog purchases. They are not replaced if lost or stolen. After 24 months, a fee of $2.50 per month is charged until the card is reused or exhausted.
The cards never expire, and can be used in stores or online. They cannot be used to pay charge accounts. If they are lost, they can only be replaced with an original sales receipt. They will be void if altered or defaced.
This winter, it lifted its $2 service fee for gift-card balances un-used after a year. The cards can be used in stores and online, but not at all airport, grocery or bookstore locations. The card will not be replaced if lost.
Cards never expire and are good in stores and online. The cards are not redeemable for cash or credit except where required by law. They can be replaced if lost with original purchase receipt.
Cards never expire, but after 24 months of nonuse a fee of $1 per month will be deducted. Lost cards cannot be replaced without original receipt. They can also be used at Sam's Clubs, if the holder is a club memeber. Otherwise, a 10 percent service fee applies.
Barnes & Noble
After 12 months of nonuse, the bookseller takes $1.50 per month of the card, except if it's purchased in California or if prohibited by law. Cards will not be replaced if lost. They can also be used at B. Dalton Bookseller, Bookstar or Bookstop stores.
After 24 months of nonuse, a monthly service fee of $2 a month is charged. They can be purchased online or in stores an used for purchases or rentals. Cards are not redeemable for cash and cannot be replaced if lost.