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Gift cards: they keep on taking
By Anita |
We’ve dissed gift cards here before but it’s time to diss them again, thanks to a recent article over at The Business Shrink.
The term “breakage” refers to the amount of money retailers get when gift cards go unused. Breakage will reach $7.8 billion dollars this year.
State legislatures are starting to take note. The Maine legislature is trying to grab 60 percent of the breakage in their state. So far retailers are ignoring Maine’s request for payment.
Collecting the money is problematic when, say, the gift card is purchased in Florida, given to a recipient in Maine and then used in California. Which state is entitled to the breakage then?
I’ve taken my daughters shopping to use their Christmas gift cards and I’ve observed another downside to gift cards. You go into a store you probably wouldn’t go into if you didn’t have a gift card. You see items you want to buy that exceed the limit on the card so you end up spending more than the gift card allotment. Add that to the breakage and retailers really make out well.
These are yet more reasons why plain old cash rules.
January 3rd, 2008 at 5:04 am
Thanks for this interesting insight. I always thought gift cards were scam.