The Q:
When Jessica Clayton of Belcamp bought her in-laws a $70 gift card to the Crackpot Seafood Restaurant & Market Restaurant in Bel Air, she and her husband thought it would give his parents a nice night out on the town.
Imagine the Claytons' surprise when the restaurant called to let them know the gift card could not be used because the location was closed for repairs.
Then, the Bel Air Crackpot closed rather abruptly on Super Bowl Sunday. Worse, Clayton discovered that the gift card she purchased would not be refunded - and could not be redeemed at the Towson restaurant of the same name.
"I know that many people lost money on this, but we just aren't sure where to turn," Clayton said.
"I have read many things online about how the company is bankrupt and the owner has a family to take care of. Well, I understand this. But we do not make much money either, and spending that money was a huge splurge for us because we wanted my husband's parents to get out once in awhile.
Can you please give us some guidance as to what we should do - not really just us, but many others who have spent and basically wasted their money on this place?"
The A:
There's nothing like the convenience of picking up a gift card for a hard-to-buy-for recipient. There is also nothing like the frustration of owning an unexpectedly worthless gift card when the business to which it is attached suddenly goes belly up.
As Assistant Attorney General Rebecca Bowman has told readers in this space before: "When you buy a gift card, you're taking a chance the business will still be there. Nothing is going to protect you if the company where you got the gift card goes out of business or goes into bankruptcy. ... My best advice would be to use [the gift card] as quickly as possible."
Maryland law forbids merchants from selling gift cards that expire or diminish in value in less than three years, but that law does not cover the more general gift cards sold at malls or bank cards that can be used anywhere.
And in the case of business closures, what happens to the value of your gift card is left entirely up to the business owner.
In this case, the Bel Air Crackpot is owned by a different corporation than the Crackpot in Towson. Neil Smith, owner of the Towson location, is one of many partners or shareholders in the Bel Air restaurant, which opened in August 2006.
Smith's Towson Crackpot, which is still a viable business with no plans on closing, is not legally liable for the Bel Air Crackpot's debts. But as a result of his affiliation with the Bel Air Crackpot, Smith says he had to file for personal bankruptcy after the Bel Air restaurant lost some key investors.
"I'm losing my condos, and I'm moving in with my ex-wife, who is gracious enough to let me move in with her," Smith said. "We owe $4.5 million to the bank and $25,000 or so to purveyors who provided us with food and beverages. We also owe much more to other businesses who did work for us from maintenance service to the original construction of the building."
The Bel Air Crackpot building will be auctioned March 25, Smith said, in an attempt to pay some creditors.
As for the gift cards, the ones from the Bel Air Crackpot clearly state that they are valid only at the Bel Air restaurant.
"I'm not legally liable for those," Smith said. "But as a gesture of goodwill since my Towson restaurant has had a long and good reputation, we want to try to do something for those people who still have the Bel Air gift cards."
Smith said he is hoping to work out a system where gift-card holders can use a portion of their cards each time they visit the Towson Crackpot until they eventually redeem the full value of their card. For example, if you own a $100 Bel Air Crackpot gift card, Smith said you might be able to use $15 or $20 per visit until you receive the full value of your card.
"We have to keep Towson alive and viable, so we can only afford to let people redeem their cards incrementally," Smith said.
But now, the Towson Crackpot does not have a computer system that is capable of reading the plastic gift cards, Smith said. The Towson location still issues paper gift certificates.
"Even if we wanted to redeem the Bel Air cards now, we have no computer system in Towson to swipe those cards to see how much each card is worth," Smith said. "We're working with our attorneys and the bank to see if we can get Bel Air's computer system into Towson. We're just asking for everyone to be a little understanding and patient. Hopefully, we'll be able to make good on all those cards."
Reach Consuming Interests by e-mail at consuminginterests @baltsun.com or by phone at 410-332-6151.