To Give and Receive - The fallacy of the Gift Card

With Christmas shopping in full gear, the stress of the holiday season is upon us. For many people the chore of trying to find an appropriate gift for everyone on their list has forced them to resort to the gift card as the best alternative. For your Aunt June, whom you see only once a year, you get her a Coldwater Creek Gift Card. For the ladies at the office, you get those William Sonoma gift cards, etc. The gift card has become the lazy man’s version of a real present. When you have no idea what to give someone or you don’t want to put the thought into figuring it out …viola…how about a gift card.

The problem with gift cards goes beyond the impersonal nature of the exchange and gets right at the heart of business and society today.

Retailers eager to make a sale, proudly display their gift cards in all available denominations by the register, making it as easy as possible to purchase a card. However, when it comes to redeeming the value of the card - forget about it. How many times have you been given a gift card to a store you would never shop at and then find yourself trying to simply return the card for cash? If you are like me, this is an all too familiar event with an all too familiar outcome. The card goes unused because there is nothing in the store you want to purchase and the retailer won’t refund your money.

In the retelling of this event, I didn’t infuse enough anger into the words to appropriately reflect my hostility towards both the gift giver and the retailer. What right does the retailer have to withhold my gift or the monetary equivalent of my gift? If the card giver wanted to donate $50 to Pottery Barn, why did he need me to serve as his intermediary?

I have often wondered why retailers are so stubborn about returning the cash. From an accounting standpoint, retailers can’t recognize the purchase of a gift card as revenue until it is redeemed. Furthermore, if the card is not redeemed within a specified period, instead of continually logging the card as a contingent liability there are regulations, called escheat laws, which vary from state to state, forcing retailers to give any remaining balance or abandoned amounts to the state as unclaimed property after a lapse of time, according to Pillsbury Winthrop, a law firm specializing in laws relating to gift cards. I can understand that retailers hold out as long as possible in the hopes that it will be redeemed, but after a certain period of time they have to know that the sale is lost. So, why wouldn’t they rather give the money back to a potential customer instead of giving it over to the government? It’s like some sick love triangle…”If we can’t have your money, then nobody can.”

Marketing departments have convinced the public that this is not only a gift, but that it is a better, more thoughtful gift than simply giving cash. A gift, ideally, says, "I thought about you. I considered your likes and dislikes, your needs and wants, your dreams and desires, and found you this token of my esteem that I hope will delight you." A gift card says, "There! Checked you off my list." Miss Manner dismisses gift cards -- as "a pathetic compromise convenient to people who do not trust their judgment about selecting the right present for those whose tastes they ought to know." Pandering to the younger consumer that feels empowered by the notion that they can pick out their own gifts, instead of being subjected to whatever Grandma Caroline bought you this year, they selfishly believe that Christmas or any other gift giving event is about the gift and not the thoughtfulness of the gift giver. Well, I hate to break it to you, but you could have just given your grandchildren cash without trekking to the mall and consequently really empower them.

It is precisely the fact that gift cards are not a form of currency, which makes them utterly useless in most situations. Remember the old Visa commercials with the tag line “Everywhere you want to be”. The value of a Visa card over any other credit card was its wide network of businesses that accepted it. Unlike cash that holds most of its value and can be used as a medium of exchange anywhere in the world, gift cards have limited utility. They also loss value if not used within a certain period of time. Thirdly, they are inconvenient. By giving a gift card you are shifting the burden of shopping onto the recipient. Simply remembering that you have a gift card is a task, not to mention finding the gift card, when you want to use it. In order to redeem the gift card, you either have to carry the gift card at all times in your purse or wallet, or remember on every shopping trip to bring it along.

In addition, no matter how large the logo is on the card. Few people can recall anything about the stores or the items purchased with a gift card. Maybe this is simply a timing issue because the actual purchase doesn’t occur until after the event has happened or maybe it’s because some of the magic of gift giving and receiving is gone because you bought the gift for yourself. While you might easily recall the X-mas you got your first bike, or the year your husband bought you a diamond pendant, would those events have been as memorable if you were simply given a gift card on X-mas and then afterward you went and bought these gifts? Would you have been able to identify the company that manufactured or sold the gift? How then do companies that intend to build customer loyalty through their product offerings make a gift card unique and memorable? The answer is they can’t – because it isn’t unique, thoughtful or memorable.

So, as you contemplate giving gift cards this year, my I urge you to simply give cash if all you want to do is provide someone with disposable income. But if you truly want to share the joy of Christmas by exchanging gifts, take the extra time to think about the recipient and give something from the heart.