…but not if shoppers represented in a new string of class action claims can recoup their value.
Consumer firms are challenging Lord & Taylor, Sur La Table, Stein Mart, and Century 21 over policies that render gift cards unusable during bankruptcy proceedings, the WSJ reports.
What the lawyers say: Retailers don’t give customers adequate information about bankruptcy gift card expirations. So shoppers lose spending power as expiration dates slide by.
What the retailers say: There’s no legal obligation to honor gift cards during bankruptcy under current laws…so why start now?
Why it matters: All the half-spent gift certificates in shoppers’ wallets can become windfalls for bankrupt retailers. Lord & Taylor is sitting on $35.5 million in unspent gift cards, according to its August bankruptcy filing. When Pier 1 Imports filed in February, it had roughly $59 million in unspent gift cards.
- And this is bigger than bankruptcy court: Between $2 billion and $4 billion of all U.S. gift cards each year are never spent, per Mercator Advisory Group data.
Via Morning Brew