Gift cards for Christmas: it’s time to kick the habit | Money

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What do shoppers at HMV, House of Fraser, Maplin, Toys R Us – and this week, Evans Cycles – have in common? They’ve all had problems using, or been left holding, worthless gift cards after the chain went into administration.

With Christmas fast approaching, and reports into the dire state of the high street, consumers are being advised to break the gift card habit and give something else this year – because it’s a Santa certainty that some people who ignore this advice will end up throwing away their cash.

Gift cards and voucher sales are worth £6bn a year in the UK, but have long been a poor choice. In 2014 the government warned that £300m is wasted each year because the recipient either loses them, they expire or they can’t spend the balance.

The fact that the climate for high street retailers has significantly worsened since then makes gift cards a double no-go this winter. Ask House of Fraser customers how the gift cards and vouchers worked out for them this year.

When HMV went into administration in January 2013 the company at first refused to accept vouchers before backtracking. When BHS followed suit, shoppers with gift vouchers were only allowed to use them as part-payment for goods. Other gift card failures include ToysRUs, Maplin, Oddbins, Bench and American Apparel.

When a company ceases trading or calls in administrators ahead of a sale to a rival (House of Fraser) the new owner has no obligation to honour the gift cards or vouchers. Those with a £100 gift card from a failed store have to join the other creditors of the company. In reality, most holders never see a penny of their balance.

In a bid to retain some goodwill – and to restore confidence in the brand – the new owner may decide to accept vouchers, but with caveats. Following the Sports Direct takeover, House of Fraser initially said it would replace the gift cards. After long delays some customers have received replacements, but others complain they are still out of pocket. Now the company says anyone who had not sent in their gift card by 31 October has lost their money.

Evans Cycles statement on gift cards



Evans Cycles statement on gift cards. Photograph: Miles Brignall for the Guardian

Similar worries face Evans Cycles customers who bought or were given e-vouchers to buy cycling accessories. The company called in administrators at the end of October. It was immediately bought by Mike Ashley’s Sports Direct. This week signs in 62 stores, and online, warned that the company was unable to accept the firm’s gift cards or vouchers, though it later said it would start accepting them. It has also stopped selling new ones – which could be a merciful relief.

Martyn James, of consumer advocacy firm Resolver, says gift cards are loaded with catches, time limits and unfriendly conditions.

“Every year, big retailers make a fortune off unclaimed or out of date gift cards and vouchers. Gift cards have expiry dates that aren’t always obvious – sometimes as little as six months. Others require you to spend the entire amount in one go – and you don’t get change or get to leave the credit on the card.

He says users with £50 on a card might spend £42, but lose the rest, which is why you see lots of people in January grumpily buying socks they don’t need.

However the bigger worry at the moment is the fear the firm will go bust. My advice to anyone who gets a gift card is to spend it as soon as they can, no matter if the business seems to be doing well,” he says.


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