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?

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

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.

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.

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.

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

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.

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

@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

@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.

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

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.

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.

@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.

@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...

"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.

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

Did anyone ever NOT know that gift cards are stupid?

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.

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...

@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.

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

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

@jeff303:

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

@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.

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?

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.

@ju_ju_eyeball: Jinx.

@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.

@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!

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.

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)

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

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

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."

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.

@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.

@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.

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!!!!

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.

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.

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

@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.

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.

@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...

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?

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

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.

@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.