Bankrupt Retailers Face Lawsuits Over Unused Gift Cards

When brands go bankrupt, their gift cards are useless.

…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

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