Insurance for the Holidays: Gift Card Insurance
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November 17, 2008
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)In this economy, you can never be too careful--especially when it comes to gift-giving.
When electronics retailer Sharper Image filed for bankruptcy in February, consumers saw a whopping $20 million in prepaid gift cards vanish into thin air. And after last week's announcement that retail giant Circuit City has filed for Chapter 11 bankruptcy, a new form of insurance has emerged: gift card insurance.
America's Research Group, a consumer behavior research corporation, estimates that close to 80% of Americans have given a gift card as a Christmas present within the past five years. Last Christmas season alone, consumers spent over $26 billion in gift card purchases.
But with companies filing for bankruptcy on a daily basis, are gift card purchases safe?
Say, for instance, you were given a Circuit City gift card and you were waiting until the holidays to use it. Oops.
Whether the nation's 2nd largest consumer electronics retailer will honor its gift cards is yet to be seen. But with the financial crisis putting a strain on American corporations, things will likely get worse before they get better.
Leverage, a company that specializes in gift card sales, hopes to remedy the problem by providing consumers with gift card insurance. If you own a Leverage gift card from a retailer that goes bankrupt, the company will transfer the card's balance to another of Leverage's 200 participating stores.
Who in the world could ever imagine a gift card would need an insurance policy?
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Thanks for the post. My name is Austin, and I work for LeverageCard.com. Gift card "insurance" is such a new concept. I hope we never reach the point, where retailers will start charging customers for bankruptcy insurance. I believe it should be mandated. Who knows what will happen. In my opinion, our bankruptcy protection is the best on the market. My hopes is that retailers will start initiating their own. It's the right thing to do. Consumers need to fight back.