Texas Attorney General Says RadioShack Knowingly Sold Gift Cards That Would Soon Expire



If the leadership of a company knows that they’re about to file for bankruptcy, should they stop selling gift cards? That’s what the Attorney General in Texas contends: that RadioShack knew after the 2014 holiday season ended that it would be declaring bankruptcy soon, and that gift cards they had issued would lose their value at the time of the bankruptcy or shortly afterward. Yet they sold ’em anyway.

The AG says that 16,700 gift cards were sold between January 1 and the Shack’s bankruptcy filing. In their June lawsuit, which this count has been added to, they declared it unfair that customers with gift card balances would have to file claims and get in the metaphorical line behind the company’s creditors in the bankruptcy proceedings to get any money back at all.

The smoldering remains of Radioshack, or RS Legacy Corp as it’s now known, have now been charged by the Texas AG of violating the Texas Deceptive Trade Practices Act by selling gift cards that it knew wouldn’t be valid for very long.

RadioShack says that it doesn’t know how to find the holders of outstanding gift cards, but the AG’s office thinks that’s a whole bunch of nonsense: many of those cards were given as promotional items with a purchase, or purchased by people who were already registered in RadioShack’s customer-tracking system.

The Defendants have informed Texas that they do not know who the holders of unredeemed gift cards are. However, Texas respectfully contends that such an assertion must be viewed with some skepticism in light of the fact that the Defendants maintain extensive data regarding their customers’ purchases. The Defendants likely know the names, mailing addresses, and email addresses of at least some of the purchasers if not the holders.

If gift card numbers are part of the transaction records, then that could be cross-referenced with the list of gift cards with outstanding balances. Right?

Amended Complaint Re: Gift Cards [Texas State Attorney General]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.