The Sharper Image Suspends Acceptance Of Gift Cards Due To Bankruptcy

Despite issuing a press release claiming that they will “continue to conduct business as usual,” The Shaper Image has suspended redemption of all gift certificates after filing for bankruptcy late on Tuesday.

After receiving several complaints that gift certificates were not being honored by the store the Consumerist was able to confirm via email with the Sharper Image’s corporate sales staff that the retailer is no longer selling or accepting the cards.

Reader Javier is stuck with a $279 store credit from a defective Roomba:

I called customer service and they sent me a Merchandise Certificate for $279 dollars. They couldn’t send me a new Roomba because they don’t consider it the same product since its a new version. During the holidays, no store in the Chicago area had the Roomba in stock, so I was left out in the cold again for 2 more months. Now, I finally go to the store and hand them my certificate and I’m told that due to Chapter 11, SI is not accepting Merchandise Certificates or Gift Cards from anyone.

Reader Jonathan’s boss is stuck with a credit card rewards gift card from Mastercard:

The card was a reward gift from Mastercard. My boss used the gift card ($500.00 total) to purchase some speakers. Today he went online to purchase a digital camera with the remainder (over $250.00) and the card would not process. He called Sharper Image customer service see what the problem was and the representative told him they had suspended gift card redemptions due to the bankruptcy.

According to the California Department of Consumer Affairs legal guide on gift certificates, the holders of cards may have a claim against the bankruptcy estate of a retailer that files Chapter 11. If the court has prohibited The Sharper Image from redeeming gift certificates, you are considered a creditor in the case, says the CDCA.

You may be entitled to file a claim, but as an “unsecured creditor” you’re pretty far down in the pecking order and aren’t very likely to get anything.

“Consumers should weigh the potential benefits of a successful or partially successful claim, against the inconvenience and expense of pursuing the claim, Even a successful claim will take time. Bankruptcies in which there are assets can take up to a year or more before creditors are paid. In many cases, there are no assets.

Your prospects for receiving your money are better if the a store chooses to file Chapter 11 bankruptcy [ed. — like Sharper Image.] This means the store intends to reorganize, emerge from bankruptcy and continue doing business. But many retail stores fail to achieve that goal. Most Chapter 11 bankruptcies eventually end up in Chapter 7 bankruptcy, which involves liquidation of all assets and going out of business for good.

If you bought your gift card you may want to try a chargeback with your credit card company, but otherwise it looks like you’ll can just sit tight and wait it out or file a claim with the court.


Consumer Tips on Retail Bankruptcies (PDF)
[California Department of Consumer Affairs]

Comments

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  1. humphrmi says:

    If you paid cash for your gift card you may want to try a chargeback with your credit card company,…

    Uh, how’s that again? Credit card companies give chargebacks for cash purchases? Who do they charge them back to? Uncle Sam?

  2. ChrisC1234 says:

    So all of those people who use their Discover card rebates to turn a $20 rebate into a $40 gift certificate just screwed themselves.

  3. Szin says:

    Damn! I hope they don’t go out of business. I love going in and looking at all there expensive overpriced stuff, or taking a 10 minute break and sitting in the $4000 Massage Chair.

  4. billbillbillbill says:

    Case in point why gift cards are a ripoff. I hope this gets the attention of the public so that next Christmas, people aren’t giving all their money for a plastic card and a hopeful promise of a product in return.

  5. coan_net says:

    wow – that stinks.

    I would think since someone paid for the gift card, it should be honored or at least refunded.

    I mean in my eyes – buying a $100 gift card is the same as buying $100 of stuff from the store. And now the store will not give you your $100 of stuff or a refund for what was purchased.

    I would be tempted to go find a $80 item, start to walk out with it, and when stopped, quickly hand them your $100 gift card and tell them that should cover it. If they try to tell you they can’t accept it because of the bankruptcy, quickly say you can’t put the item back on the shelf because of the bankruptcy. But hell – if I was owed something, I sure would do what I could to get it.

  6. laserjobs says:

    Gift Cards = SCAM
    Cash is accepted everywhere and it is much prettier

  7. scoosdad says:

    What’s a chargeback going to accomplish? Aren’t the credit card companies in the same boat as all the other unsecured creditors? Knowing this, the credit card company is probably not going to immediately give you a credit in this case.

  8. NotATool says:

    Another reason why cash is a better gift than gift cards.

  9. theblackdog says:

    @billbillbillbill: Well unless Lowes decides to go out of business in the next week, I think my dad will be able to put his birthday gift card to good use :-P

  10. NotATool says:

    @coan_net: Problem is, all the other entities who are creditors to Sharper Image (i.e. suppliers, investors, etc.) have exactly the same argument. For instance, a supplier may have shipped $100,000 of merchandise to Sharper Image and have not been paid for it.

    The bankruptcy court will create a pecking order in which these various entities are paid back. Apparently gift card holders are low on the list.

  11. ianmac47 says:

    This is just a good example why you should never buy a gift card.

  12. Snarkysnake says:

    No gray area here… This is just plain wrong.
    Hard to see how this is not a “conversion” of funds from their possession and use by the owner to another entity.
    When SI executives and bankruptcy lawyers get through picking the corpse of this company, there is not likely to be anything left for cardholders.
    Sad , damn sad.
    Next time,give cash.

  13. Hawkins says:

    I guess this is another reason why gift cards are stupid: they make you a creditor, exposed to the risk that your debtor (the business that issues the gift card) will weasel on the loan, using any of the 817 standard weasel-tactics.

  14. ClayS says:

    @NotATool:
    So in buying a gift card, you are effectively lending a retailer money, at 0% interest, with no collateral.

    And if they declare bankruptcy, you can get on line with all the other creditors.

    Real good deal.

  15. socalrob of the 24 and a half century says:

    @ianmac47:
    Agreed. After the fiasco we had just this past xmas with certain places either refusing to accept or not knowing how to accept the widely accepted visa gift card, we have decided to go back to the universally accepted cash. Hopefully they know how to accept that.

    Oh it was a KFC that wouldnt accept it BTW, but I think it was just that one seeing as we went and they were, and I quote, out of chicken. Not kidding on that one. KFC… out of chicken… yeah…

  16. Ausoleil says:

    “I guess this is another reason why gift cards are stupid: they make you a creditor, exposed to the risk that your debtor (the business that issues the gift card) will weasel on the loan, using any of the 817 standard weasel-tactics.”

    And probably have arbitration in the fine print too.

  17. Buran says:

    @scoosdad: I imagine on the grounds of “goods not as described”. An unusable giftcard certainly isn’t what was advertised.

  18. picshereplz says:

    Did anyone ever NOT know that gift cards are stupid?

  19. BugMeNot2 says:

    I see that there are a ton of Sharper Image giftcards still available on eBay with bids. There are going to be a lot of upset people.

  20. SchecterShredder says:

    I will NEVER buy a gift card from anywhere ever again! Oh wait, I never bought one to begin with…Thanks UNIVERSITY I WENT TO! I did learn something…

  21. jeff303 says:

    @NotATool: Not only that, but some investors (such as those holding preferred stock, if Sharper Image issued such a thing) get first dibs in the event of insolvency or bankruptcy.

  22. shadow735 says:

    Theives, doesnt affect me as I never did business with them.

  23. ClayS says:

    @jeff303:
    Actually, preferred stockholders fall below regular creditors, but ahead of common stockholders.

  24. Hawk07 says:

    @jeff303:

    I think Preferred Stock holders are just above common stockholders in liquidation and both are at the bottom.

  25. scoosdad says:

    @Buran: Right, but the credit card company knows that in order to give you a chargeback on that, they need to be able to get that money out of Sharper Image too. They don’t just give chargeback money out of a big cash fund they have for that, it has to have an accounting basis somewhere and a paper trail ultimately back to Sharper Image’s account with the credit card issuer.

    So then why would the credit card companies willingly transfer Sharper Images’ debt onto themselves with a lot of chargebacks that have a pretty good chance of being uncollectable? Let’s see if anyone here has any success in getting a chargeback on a Sharper Image gift card, though.

  26. ju_ju_eyeball says:

    Let me see here… They took money from someone to buy a gift card. Now they won’t honor it? I agree they should not sell more, but not honoring the ones already out there is down right stealing. How do these corporate nutjobs sleep at night?

  27. howie_in_az says:

    This is pretty shitty. I don’t understand how they can just not accept gift cards that have already been purchased; in my eyes it’s the same as them stealing money.

  28. howie_in_az says:

    @ju_ju_eyeball: Jinx.

  29. ClayS says:

    @howie_in_az:
    Apparently, that’s the law. Maybe Congress ought to take a look at this issue, with all the billions outstanding in gift cards. I mean when they finish jacking around with the MLB.

  30. NotATool says:

    @ClayS: Even better, they have your money, can earn interest on it, and there’s a percentage of people who never redeem the full value of their gift cards. Gift cards are a great deal for the retailer!

  31. Blueskylaw says:

    I only give cash as gifts, unless I somehow know that they want a gift card for a certain store. I get too tired of running around during Christmas time looking for the “perfect” gift. My nieces and nephews dont need any more clothes or toys, who knows what they like anyways? The money they get is put into a brokerage account for investment.
    As for older adults, a succulent steak at a great grill house always hits the right spot.

  32. Quellman says:

    This is not news, bankrupt companies have been doing this for years.
    The only recourse is the court system, OR try and sell the cards online to people who aren’t aware the stores don’t accept them. (This leads to an ethical problem you can lose sleep over)

    @ju_ju_eyeball: @howie_in_az:
    Simple, most times the company is sold to professional liquidators (Comp USA). The holding company has no obligation to accept the cards, since they acquire the assets (inventory, stores, people) and not liabilities (gift cards)

  33. vincedia says:

    There was a nice spike of SI gift cards on Ebay. I feel sorry for all those peeps that have no clue.

  34. trinidon2k says:

    Wow. That sucks. Can they take them to small claims court?

  35. PicketFence says:

    Yet at the bottom of the homepage of their website, it still reads, “Sharper Image Gift Certificates have no expiration date. Valid Certificates are always honored.”

  36. Christovir says:

    I agree that gift card holders “should” get their money back, but SI is in the unfortunate position of having X money and owing Y money, where Y is a helluvalot bigger than X. That means people who are owed money aren’t going to get it, no matter how “wrong” it is — the money just is not there. The moral question here is who gets first dibs at the money they do have — and this will be decided in court.

    The real lesson here, as Consumerists know, is don’t buy gift cards. They are a bad deal even if the issuer doesn’t go bankrupt.

  37. RokMartian says:

    @theblackdog: I love Lowes, but gift cards still suck. I believe that if you try to return something at Lowes that was purchased with a gift card, they treat you as if you had no receipt and you will receive a store credit on a new gift card. Other stores do this too, not just Lowes.

  38. picshereplz says:

    @Quellman:
    This is different from the situation of a company being sold off to “professional liquidators.”

    During a bankruptcy process, the bankruptcy trustee will try to find all of a debtor’s assets and liabilities and plug up its liabilities with the assets. Secured creditors come first, then unsecured creditors. But in the meanwhile, bankruptcy laws put everything on hold to give the trustees time to work it all out.

    Same shit happens during personal bankruptcies too. Anyone who’s declared bankruptcy has most likely shafted some or all of their creditors.

  39. taylorich says:

    BOOOOO! I got a $40 card for Christmas and given the fact that their marketing/catalogs only showed $500 air purifiers I was holding it until I could go in the store. Now I’ll never get my $45 nose hair trimmer or my $20 luggage tags!

    Think about the robots!!! Good grief, the ROBOTS!!!! The horror!!!!

  40. Blueskylaw says:

    As far as I am concerned, this is the same as myself going into a Sharper Image store, picking out a few items, then having them scanned and getting a total. Hand the cashier a hundred Dollar bill to pay for said items and then being told that sorry, we declared bankruptcy while your bill was being totaled, and we now get to keep your money and kick you out of the store with a maniacal laugh while keeping your merchandise.

  41. A touch of accounting.
    First, Breakage. This is when a company sells a gift card that goes unredeemed. As you can imagine, it’s the most profitable thing you can sell. To wit, you have sold nothing, but realized return on the nothing you have sold. Easy peasy. It’s why gift cards expire. They are hoping for breakage.

    Second: How does a firm account for a gift card. Generally, they create a liability account. And they call the money unearned revenue. If they are a good company with nice accountants, they do not put the cash in “Cash” and they do not recognize the revenue until you cash in your gift card or breakage occurs. Off balance sheet, with no liability account on the sheet either. It sounds shady, but it’s the ethical way to handle the accounting of gift cards.

    If they are trying to work the sheet, they recognize the revenue, and create a liability.

    Here’s an interesting idea. If they are doomed to chapter 7 (seems likely, considering they sell stuff that no one really wants to buy, only browse), gift card holders might want to form a class, and file suit collectively, for claims against revenue/assets. Individually, no gift card holder is owed large sums. Collectively, it might be very large, indeed. Might get one bumped up the list of creditors. Don’t know if it’s been tried before, but it’s a perfect use of class action. Perfect use.

    Last: The ironic thing is gift card holders are the easiest to pay back. They just want merchandise. If they go Chapter 7, why not honor the GC’s, but at full retail price, rather than at liquidation prices. That would suit both parties reasonably well. Speed the liquidation, relieve the gift card holders’ claims, and actually improve accounting profit on the liquidation. Win-Win solutions.

  42. PølάrβǽЯ says:

    @scoosdad: I agree. Personally, I’d consider it fraud. Screw bankruptcy court, I’d sue them for it.

  43. picshereplz says:

    @PotKettleBlack:

    The secured creditors would be up in arms (more importantly, their lawyers would be, too) if the trustee paid off unsecured creditors off first.

    Also, businesses don’t do Chapter 7s.

  44. coan_net says:

    Hum… maybe walk in the store, pick up some items, then say you filed bankruptcy while you were holding the items – so if they would like the items back, they will need to go through the courts to get them back.

  45. PatrickIs2Smart says:

    @ChrisC1234: I would think that if you explained the situation to the Discover Card people, they’d probably be able to do something about. Whenever I call, they always seem to be willing to help with just about anything…

  46. TampaShooters says:

    Why exactly would anyone actually buy anything from The Sharper Image in the first place?

    Mom: Hey son, i got you a $100 gift card
    Son: WOW, Great
    Mom: It’s from “The Sharper Image”
    Son: You don’t love me do you?

  47. friendlynerd says:

    I don’t see how this is even remotely legal. Truly mind-boggling.

  48. AD8BC says:

    My wife had a $50 gift certificate for Paul Harris Stores, shortly after receiving it they filed for bankruptcy and refused to honor the gift certificate. This was, oh, at least 7 or 8 years ago.

    Just last month, she finally received her creditor settlement: $18. All of their creditors received 36% of what they were owed.

    As a gift card holder, you are a de facto creditor — you (or somebody in your name) loaned the company money, a zero-interest loan, until the time of your choosing when you called the loan by accepting a like amount of merchandise.

    Same thing with a store credit. You accepted a loan in the amount of money due you. Same thing, you are a creditor.

    When a company or individual declares bankruptcy, their creditors are put on hold. You (and all other creditors) will be represented by a law firm in a sort of class-action. When a settlement is approved, the company’s assets will be split among all the creditors (and the law firm that will represent you).

    At that point, you will get $crewed by getting pennies or dimes on your dollar.

  49. Bitmapped says:

    @picshereplz: Businesses do Chapter 7 bankruptcy if they are trying to liquidate their company. Chapter 11 is if they are reorganizing to continue in operation.

  50. krom says:

    There really needs to be a consumer collections agency for corporations. They’ll hammer and threaten and fee-tax us to pay our debts, who puts them to the fire to pay their debts to us?

    Can we all call them up and harass them, and their partners? Call them a deadbeat company? Report them and their executives to a corporate credit reporting agency? Put a lien on their massage chairs?

  51. AD8BC says:

    @krom: Sounds nice… but once they enter bankruptcy protection they are protected.

  52. AaronZ says:

    How long after a purchase can you do a chargeback?
    In the case of the guy who bought a roomba and now has nothing, can he do a chargeback from several months prior for the original purchase?

  53. coreyk72 says:

    Nothing says “I think you are a complete and utter douche bag” more than giving someone a Sharper Image gift card as a gift.

  54. damitaimee says:

    @ClayS: wow. i never looked at it that way. lending them money at 0% interest.

    you have convinced me to never buy a giftcard again and instead just hand people cash if i can’t come up with a better gift idea.

  55. charlah says:

    From the same California guide:
    “A gift certificate or gift card sold by a seller that seeks bankruptcy protection may have no value. However, the holder of the certificate or card may have a claim against the bankruptcy estate.

    Sellers that file “Chapter 11″ (reorganization) bankruptcy intend to stay in business, so they typically will ask the bankruptcy court for permission to honor gift certificates in an effort to maintain good customer relations.

    If the bankruptcy court does not allow gift certificates or gift cards to be honored, or if the seller files “Chapter 7″ (liquidation) bankruptcy, holders of gift certificates or gift cards are creditors in the bankruptcy case. They have relatively high priority among unsecured creditors in a Chapter 7 case, and may receive some percentage of the certificates or card’s value, but only if the bankruptcy estate has enough assets to pay claims. For information on filing a claim, and other basic information on bankruptcy, see “Consumer Tips on Retail Store Bankruptcies,” under the “Bankruptcy” tab under the “Publications” button at http://www.dca.ca.gov.

    A recently-adopted California law is intended to help gift certificate and gift card holders when the seller declares bankruptcy. It requires a seller in bankruptcy to honor gift certificates issued before the date of the bankruptcy filing. No court has ruled on the effectiveness of this law.”

  56. Buran says:

    @scoosdad: I think that to accept credit cards you have to accept liability for selling items that aren’t as described, so if they still accept credit cards they still have to be subject to chargeback. I think the policy may vary from card to card, so maybe Amex would give you your money back while Discover might not (I’m just using names here as an example) but if SI is still taking credit cards, then shouldn’t they theoretically still have an account to chargeback the fraudulent purchase against?

  57. RobinB says:

    Hmm,I have a whole wallet full of gift cards I had better go redeem before the stores declare Chapter 11.

  58. balthisar says:

    Are they taking returns while in bankruptcy? If so, and I had a gift card, it seems like a perfect time to flip-flop on my “retail renting is not ethical” position. Hell, I’d probably go so far as to buy something the value of the card, and file a charge back for that amount.

  59. BlackBirdTA says:

    Damn, just when I had enough gift cards saved up for that giant “Aliens” replica.

  60. picshereplz says:

    @picshereplz: “Also, businesses don’t do Chapter 7s.”

    Wow, I meant to say they’re not doing a Chapter 7. Yikes.

  61. Benstein says:

    I would just walk in, take $279 worth of stuff, hand them my gift card and walk out.

  62. trickonion says:

    @ClayS:

    That was.. the best explanation of gift cards I’ve ever heard. Thank you.

  63. thalia says:

    Wait a second, you have to pay to put money on a gift card, and they don’t accept it? In that case, sue to get your money back. Frickin’ ridiculous.

  64. timsgm1418 says:

    good one@coan_net:

  65. wickedpixel says:

    quick, sell it on ebay before everyone else finds out!

    i kid, i kid…

  66. cef21 says:

    @scoosdad: No. The Sharper Image is, essentially, a creditor of the credit card company. The CC company regularly sends a bunch of money into the Sharper Image’s account as payment for the credit card purchases. If you issue a charge-back, then that amount gets deducted from the next amount they send to the Sharper Image.

    @nursethalia: Good luck on that. When a company is in bankruptcy, suits are generally stayed, especially if they’re by creditors trying to get their money back.

  67. taylorich says:

    @coreynyc: Just to be clear…I was not given the gift card as a present. It was handed to me and my dad said “I’m never going to use this, do you want it?”

  68. Hawkins says:

    @aaron8301: OK, so you sue them, and the judge agrees that their conduct is outrageous, and orders them to refund your gift card IMMEDIATELY. And adds penalties, for fraud, and because the Ionic Air Transmogrifier was stupid.

    Great! You are now in possession of a judgment.

    Now it’s time to collect on the judgment. How do you collect? Why, you get in line with all the other schmucks to whom they owe money, but who are dicked because of the bankruptcy.

    Not optimal.

  69. PolythenePam says:

    I had just redeemed my Discover reward for a Sharper Image Gift Card last week. After reading about this on Consumerist I called Discover and told them what happened. The lady I talked to hadn’t heard about this, but she offered to either give me a different reward or to put the $20 back on my account so I could redeem it later. It was really easy! Hooray for Discover card!

  70. D-Bo says:

    @coan_net: My thoughts exactly, this is complete BS. If they are still open they should honor those gift cards.

  71. Snarkysnake says:

    I just posted a warning in Ebay’s guides about this. There are about 30 of them on there now. These people are going to get screwed.(Some are going over $450. Sad.

  72. laserjobs says:

    @Snarkysnake: eBay was notiifed at 10AM this morning about the situation. They have ignored the warning and could very well be liable for the loss for not acting on the material information provided to them.

  73. laserjobs says:

    [www.leginfo.ca.gov]

    SHARPER IMAGE IN CALIFORNIA IS REQUIRED TO TAKE GIFT CERTIFICATES!!!

    CALIFORNIA CODES
    CIVIL CODE
    SECTION 1749.6 (b) An issuer of a gift certificate who is in bankruptcy shall continue to honor a gift certificate issued prior to the date of the bankruptcy filing on the grounds that the value of the gift certificate constitutes trust property of the beneficiary.

  74. RandomHookup says:

    @D-Bo: They should, but it’s up to the bankruptcy judge. Almost everything in a bankruptcy has to go through the judge to get approved. You should have seen the mess when a big Boston jewelry store closed its doors just before Xmas (and the owners skipped the country off to India). The court had to approve the use of company stationary by the managers appointed to manage the sale of the company.

  75. Bunklung says:

    The Sharper Image has plenty of collateral. If sharper image owes you money, consider doing it the old fashion way. Walk in and TAKE the collateral.

    *smiles at camera*

  76. SchecterShredder says:

    If I had a giftcard from this place and they refused to honor it while I’m standing in THEIR store with THEIR merchandise on the shelves, I’d pick out the MOST expensive thing I could carry and head straight for the exit. No joke. FUCK THE SHARPER IMAGE! Good riddance…

  77. thufir_hawat says:

    @laserjobs: As charlah writes, “No court has ruled on the effectiveness of this law.” A bankruptcy court is very unlikely to void the Code’s priority scheme based on a state statute. Good luck with all that, though.

    I have some sympathy for cardholders. The funds paid for the cards constitute trust funds and/or the cards represent a secured debt. It is just that (i) the funds have already been spent, so there is no way to recover them in bankruptcy (they’re already gone), and/or (ii) they are junior to the company’s other lenders and those lenders’ recorded liens (not that you can be secured in cash except through possession anyway).

    People and corporations file bankruptcy every day. Banks and suppliers feel the pain everyday (from the special assets group at the bank, to the lady who makes the “50% off” signs, to the coffee company, to (on a more painful personal note) the professionals they owe money then they file). That you feel it on a personal level may be new to you, but it is why the Court’s and the bankruptcy laws exist: fresh start for debtors and equality of distribution for all creditors.

  78. MyCokesBiggerThanYours says:

    YEA! Finally a story about corporate policy and not the usual crap about a individual that sucks at customer service.

    ON that note: I can’t believe this move is legal. Especially in CA.

  79. MBZ321 says:

    I would NEVER buy someone a gift card for a specialty retailer. I mean, If you give someone a Wal-Mart or Exxon or Safeway gift card for example, there is almost zero chance of a situation like this.

  80. StevieD says:

    Per the CC transaction, you have received the goods. Therefore a chargeback is not going to be allowed.

    The fact that you failed to take the goods with you as you departed the store is your fault. Oh sure what good is a gift card, but that is not the point. The important issue is that YOU failed to use the card promptly. In the eyes of the CCC Sharper Image did not do anything wrong, thus no chargeback.

    Now, if you if are a good little boy or girl and your CCC really likes you, there is a chance that your CC will refund the money to you and take the chance that they can collect from Sharper Image at a later date. But that is up to the individual CCC and their desire to make you feel good.

    In the mean time the court is not going to allow chargebacks as those charges (collection of funds) would be paid out of sequence with secured creditors.

  81. StevieD says:

    @Bunklung:

    And go to jail.

    At this moment Sharper Image does not exist as a functioning company. Those items that you removed from the shelf belong to the secured creditors. The unsecured creditors can mop up the floor and recover anything that they can find.

  82. JoeLikesRamen! says:

    [digg.com], yo.

  83. azntg says:

    Replace “Friends don’t let friends do drugs!” (And watch him die after depriving him for a critical heart medication? Too broad.) with “Friends don’t give friends gift cards!” (There, no more room for ambiguity!)

  84. SOhp101 says:

    Reason #28 why you should never give gift cards.

  85. patnpendin says:

    By the way, your issuing bank will always file a chargeback for you. If the merchant (in this case Sharper Image) does not respond to the chargeback, it is actually the merchant account provider (the bank that processes their CC transactions) who takes the hit for the disputed amount.

  86. Frostberg says:

    A gift card is a bad gift. A sharper image gift card is a super terrible gift.

  87. notallcompaniesareevil says:

    Wow. Trade credit is supposed to be the first claim during any liquidation and Chapter 11 is designed to allow trade to continue. If gift cards aren’t trade credit, I don’t know what is. This smells really bad and I wouldn’t be surprised if they reverse course. They should.

  88. Cavenger says:

    The man’s always got his foot on your neck

  89. mike says:

    Just curious, what do folks think of gift credit cards? Most banks have them. I think gift cards are horrible. They’re only useful for certain situations (housewarming parties, weddings, etc) where a lot of them will do good in one place.

    But credit cards/cash have the drawback that the recipient will use it for non-gift stuff, like bills.

  90. ubuwalker31 says:

    @humphrmi, scoosdad, AaronZ, Buran, StevieD, patnpendin

    It would be foolish not to try to get the credit card company to refund your money. The purpose of filing a chargeback is that the credit card company has a very large amount of bargaining power compared to an individual, especially in the context of a bankruptcy. Also, its not just the credit card company’s bargaining power, its the insurance company’s bargaining power who is backing you up, because the credit card company has purchased a policy to cover its chargebacks.

  91. scoosdad says:

    @ubuwalker31: You mean, an insurance policy to cover chargebacks that the credit card company has no hope of recovering from the original source, like this SI bankruptcy, or fly-by-night outfits that disappear.

    I work with a lot of retailers who accept credit cards, and trust me, the chargeback comes out of their pockets, if they’re still around to be charged back.

  92. josh42042 says:

    what gets me is that i bet the sharper images’ ceos and execs are still getting a hefty paycheck, while tons of people are out a few hundred dollars each for their rommbas and stuff.

  93. ribex says:

    Discover Card just refunded my $40 cashback bonus award ($80 Sharper Image) that I had requested in *July 2007*! It’s worth a few minutes of your time to ask. I’m pleasantly astonished.

  94. fstreet says:

    SHRP had $34.808 million in deferred revenue liabilities (e.g. gift cards) on its balance sheet in the Company’s last 10-Q filing. Undoubtedly, you can imagine more than a few people are going to be affected by their giftcard-refusal policy.

  95. Imhotep says:

    What a bunch of bloody coonts!

  96. patnpendin says:

    There is no “insurance company” that backs CC transactions. There is no bargaining power when it comes to chargebacks…it is a case by case situation. The bank that issued the purchasing card initiates a cb with the acquiring bank. Should the merchant avoid paying the cb, it is the acquiring bank that foots the bill. Believe me, I underwrite merchant accounts for a payment processor so its my job to know this.

  97. Kounji says:

    @Hawk07: The order is bond holders first. Then the preferred stock holders get the proceeds from liquidated property. Common Stockholders… well they’re boned.

  98. notallcompaniesareevil says:

    @Kounji: A more fullsome list would have trade creditors first (which I would imagine gift cards are, in addition to utility bills, etc), then secured debt holders (bank debt, mortgages, etc.), then unsecured debt holders (bonds), then subordinated debt holders (subordinated bonds), then preferred stock, then common stock, then me.

  99. jannyo says:

    A DAY AT DULL IMAGE

    After hearing the news the other day about Sharper Image’s financial difficulties, I decided today to redeem my $80 gift card that I got from my Discover Card back in November of 2007, by redeeming $40 worth of my cash-back rewards money. I finally made up my mind on 4 purchases, three of which were substantially discounted and even qualified for an additional 10% off. My card was going to be left with a balance of $2.49, for which I requested it back in cash from the clerk, as they have done in the past for such a small amount. He went off to the manager, whom I have dealt with before. The manager came back to tell me that they weren’t accepting gift cards at this time at all and handed me a piece of paper stating their new extremely flawed policy, to which I responded “that sucks!” He quickly took the bag of merchandise back from me. I should have grabbed the bag and thrown the $80 card at them and said keep the change. But I didn’t. Unlike them, I am honest. Meanwhile while I was trying to cash out, I was being offered an additional 15% discount if I applied for one of their credit cards, fat chance, knowing what I now know! I found this message board and took the advise of some to call Discover Card. I owe a great deal of gratitude to these posters. Sitting around until mid-March to find out that I have been screwed doesn’t interest me at all. Joanne of Discover Card honorably credited back the $40 that the $80 gift card had cost me. I did notice too that Discover Card has already taken down the offer for Sharper Image on their Cash Back Rewards program web page.

    I will never shop at Sharper Image again, and I feel bad for the people who really get stuck by them. If they really think they will be able to reorganize and get customers like me back, they have another thing coming. I smell Chapter 7 coming on very quickly for this company. It is too bad. I had gotten some really great deals from them using my Discover rewards that basically made everything half price already (as long as they weren’t extremely expensive items, like Roombas, etc), and I almost always made sure that I was getting items that were substantially reduced during Sharper Image’s sales, so I really made out very well. Yes, they don’t sell too many items that are low or even moderate in price.

    Sharper Image deserves to go out of business. You don’t treat customers who show up wanting to buy merchandise with a legitimate way of paying for it and basically tell them to leave the store, and by the way you aren’t going to take the merchandise home with you. Clearly this is a company that should have gone out of business several years ago in an honorable fashion, not by ripping customers off. They still mention gift cards on their web site. I am sure that the top executives still are making their outrageous salaries while their hard working employees will be left with nothing in the end, except closed stores.

    Good riddance Sharper Image. You should change your name to Dull Image. By the way, selling those Trump Steaks was one of the stupidest things they ever did. I am sure that Donald got paid his money before pulling those losers off the shelves. But then again maybe they owe him lots and lots of money!….

  100. Fili says:

    Lucky for you. I’m the one who got stuck with the $279 certificate and no recourse. I loved my Roomba and if it hadn’t been for SI, I would have sent it to iRobot and gotten it fixed. I would have an older model, but a working one to help keep my place clean.

    bastards!

  101. itsallme says:

    @Fili: contact iRobot and explain your situation. maybe you’ll be lucky and find out they are one of the few companies with decent customer service and could possibly do something to help you. it would be worth a shot.

  102. PamNj says:

    I was there today. They just can’t take the cards while they are in bankruptcy court. Once it’s over in a week or so everything will be business as usual. It’s a legal issue.

  103. jmaddmmmk says:

    i was looking into more ways of getting gift cards protection, or seeing if any store even offered bankruptcy protection, turns out NO ONE does. however, I did find a company that sent out a press release soon after the date, ” Leverage Inc. today announced a new bankruptcy insurance policy that allows customers holding gift cards purchased via its LeverageCard.com destination from Sharper Image and other merchants filing for Chapter 11 bankruptcy protection to transfer remaining, unredeemable balances to gift cards from other retailers available on the Leverage site. “

  104. austinchu says:

    I work for a company that manages and tracks gift cards and I’ve been following the sharper image bk on savvywallet.com. Below are the ways to file a claim to get your gift card back. Bear with me, it’s long:

    1. File a claim with the federal bankruptcy court. Follow these steps:
    A. Because The Sharper Image’s bankruptcy was filed in Delaware, you have to visit the Delaware Bankruptcy Court Page.([www.deb.uscourts.gov]) Scroll down to Sharper Image.
    B. Fill out Form 10 from the Federal Bankruptcy Court. ([www.uscourts.gov])
    C. Download, print and sign it, and mail it to:
    Kurtzman Carson Consultants, LLC ([www.kccllc.com])
    Jonathan Carson
    2335 Alaska Avenue
    El Segundo, CA 90245
    310-823-9000
    310-823-9133
    D. If you have trouble call the Bankruptcy Judges Division at 202.502.1900. Explain your situation, and they will walk you through the process. You will get a person on the phone as well.
    E. Take these steps to file a claim with the Federal Bankruptcy Court

    2. Take advantage of the offer from competitor The Sharper Image’s competitor, Brookstone, to give a 25 percent discount to anyone who surrenders their Sharper Image gift card or certificate. [www.brookstone.com]

    3. Try filing a claim with your credit card issuer, if you used a credit card to buy a Sharper Image gift card
    A. Request a refund from the card issuer.
    B. American Express is ‘working on behalf’ of it’s card holders who submit such claims, even if the submission is beyond the 60 day statutory limit. This will be on a case by case basis.
    C. Also, AMEX cardholders who opted for the Sharper Image gift card as membership rewards programs can return it and have their rewards points re-credited to your account. MUST DO IT WITHIN 60 DAYS

    4. Also if a card that you gave or received was purchased from LeverageCard.com, Leverage has a bankruptcy policy that allows cards that are purchased via LeverageCard.com to be replaced with any retailer of choice. You can read more here. ([findarticles.com])