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Buying gift cards for Christmas? Here's what to consider this year

Posted at 5:00 AM, Dec 10, 2020
and last updated 2020-12-10 08:16:14-05

KANSAS CITY, Mo. — A consumer survey from the National Retail Federation found gift cards top the list of gifts people would like to receive this holiday season.

It's an easy and convenient gift for gift-givers, but this year there are some additional factors to consider.

There have been more than 6,000 commercial Chapter 11 bankruptcy filings to date in 2020, according to a database maintained by Epiq. The list includes major companies like J.Crew, Gold's Gym, Neiman Marcus and JCPenney.

The Kansas City metro also is seeing beloved restaurants struggle, with some forced to close their doors due to the pandemic.

The possibility of closures might be something to keep in mind while Christmas shopping.

Consumer gift card protections depend on the size of the business.

If a large chain files for bankruptcy, for example, that doesn't mean stores will immediately close. Often there still is time to shop in person or online, but there might be restrictions.

"You might want to look those terms up," Mary Beth Quirk, shopping editor at Consumer Reports, said. "They're not going to reach out to everyone and say, 'You have a gift card, we went bankrupt.' They're going to be covering what they have to cover."

A consumer who is unable to use a card before operations cease can file a claim in the company's bankruptcy proceedings, but that can be a lot of work for a $30 gift certificate.

The situation is different for small businesses, which typically close on shorter notice and without bankruptcy proceedings.

If a small shop or restaurant closes, it is unlikely the gift-giver or recipient will get the money back. However, buying a gift card from a locally owned business is a way to show support during the COVID-19 pandemic.

"You're kind of buying that gift card to say not only do I want to give this person some coffee or a meal, but you're also trying to invest in a business and guarantee it stays around," Quirk said.

There are some other important considerations to keep in mind while purchasing gift cards.

Quirk said buying online directly from a retailer is the safest way to shop.

Avoid resale websites where gift cards are listed at steep discounts.

Finally, if choosing to buy a card from a large in-store display, check the bar code and packaging for signs of tampering. There have been reports of scammers purchasing one gift card, then duplicating the sticker and placing the same bar code on cards that hadn't been sold. The scammers would then be able to swipe balances when a shopper purchased and loaded one of the cards.