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I was a gift card virgin - until recently. Now, I will not use them anymore. Number one - they aren't worth the trouble. Number two - they aren't worth their full face value. There's hidden info that consumers don't know about until they try to use them, which brings me to number three - they're aggravating!

What sounds like a convenience at first isn't what it's cracked up to be. My hubby and I had dinner with friends Saturday night at a lovely local restaurant. Live jazz, great food, nice ambience. OK, I'll mention the name. Bobby's in Scottsdale. Very cool place.

I had cashed in my remaining Aeroplan miles (Air Canada) when I relocated to the U.S. Because the selection was limited in the States, I opted for a $100 CDN American Express dining gift card. It expires next week, so we decided to make it a special night to celebrate life - in spite of the crummy economy.

Add to that, two Norton Symantec rebate VISA gift cards for purchasing Norton 360. One was for $35, the other for $20 (USD). Sounds simple enough. Split the bill in half and use our cards until our share was zero. Yah, sure.

The restaurant's processing company rejected all three cards! The manager was very apologetic. And the owner was very sympathetic when I called to inquire. Seems they have problems with gift cards in general. And guess what? They're not alone. Restaurants are especially vulnerable to gift-card problems because the issuers automatically add a 15-20% gratuity. When they ran through $30 on my $35 VISA gift card, it was rejected. Seems these card companies aren't communicating adequately with the restaurants when the gratuity fee rises from 15% to 20%!

Although my evening out ended with me being ticked off, I can't fault the restaurant. They're victims, too.

Plus, every time a consumer uses a card in a retail environment, they lose a dollar for the transaction fee. Want to use your $50 gift card at the grocery store? Tell the cashier to put it through for $49. Aha. Just a minor detail.

And gift cards are big business. The National Retailers Federation estimates that consumers
spent $26.3 billion on gift cards last Christmas season. Yikes.

According to a Consumer Reports article, "... a card is one gift that can keep on giving – grief. That's especially true for bank-issued cards, which often saddle recipients with fees, expiration dates, and other gotchas."

"A national survey of 1,500 consumers done last spring by WSL Strategic Retail, based in New York, found gift-card fees and expiration dates were among the top causes of frustration. And that's just among people who attempted to use them. Earlier this year, TowerGroup, a research firm in Needham, Mass., estimated the value of unused gift cards in the U.S. at $8 billion for 2006. And in its fiscal 2006 annual report, the retailer Best Buy revealed a $43 million gain from gift cards that were unlikely to be used."

So what does this teach us from a marketing perspective? Read the fine print? So much for the new transparency and authentic marketing practices we're supposed to see these days.
What about you? Has this ever happened to you? What did you do about it? Do you buy gift cards?

Continue reading "Gift Cards: Another Example of Duping the Public" ... Read the full article

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image of Elaine Fogel

Elaine Fogel is president and CMO of Solutions Marketing & Consulting LLC, and a marketing and branding thought leader, speaker, writer, and MarketingProfs contributor. She is the author of the Beyond Your Logo: 7 Brand Ideas That Matter Most for Small Business Success.

LinkedIn: Elaine Fogel

Twitter: @Elaine_Fogel

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