I’ve warned in this column about the menace of retailers’ giftcards. Many readers have happily handed them out as presents, only for their friends and relatives to fall foul of ridiculous deadline rules.
With Christmas coming, it’s timely to remind you of this massive drawback – but also to alert you to an even more risky aspect of the cards that makes them, in my view, a financial product that everyone should avoid.
The traditional problem with retailers’ giftcards is that they often must be used within a certain time. If someone receives one as a present and doesn’t use it immediately, then they could discover it’s absolutely worthless.
That’s because some retailers refuse to honour them if they’re not used by a deadline written on the cards.
It means if someone pops a card into a drawer and remembers it months later, they may have lost the money.
But there is a second reason not to buy them – if a retailer goes bust or is taken over, then its giftcards may be instantly worthless.
Reader KS of Croydon was alarmed to read that department store chain House of Fraser was in trouble this summer.
He had previously splashed out £380 on giftcards and vouchers for his disabled sister to use in the store.
When news broke that the chain of department stores had been bought out by Sports Direct, he assumed that the new owner would honour the cards.
But that won’t happen. Sports Direct said in a statement that the company is not liable to honour giftcards or vouchers held by House of Fraser shoppers. Instead, customers were asked to pay to post their giftcards to the retailer’s head office in London.
The hope was that a replacement would be issued. But the fear was that the replacements would be giftcards for Sports Direct, which offers shoppers a totally different kind of goods.
When KS went into a local House of Fraser store he was told to post his cards and vouchers to the firm’s Baker Street head office and that the company would consider his complaint.
He did so, but weeks later he had heard nothing and said it was impossible to get through to the head office by phone.
He spoke to people at his local store but told me they remained tight-lipped.
“When I told them over the phone that they needed to follow protocol in regards to the rules, they hung up,” he said.
“The second time I called, they were quite aggressive and told me there was nothing they could do. Everyone I spoke to refused to give their names.”
He added: “My mother has also sent vouchers to the head office for compensation, but she has also heard nothing.”
I shouldn’t be surprised at this total lack of decent customer service, but I am. I would have presumed that the new owner would want to start off on the right foot and treat customers decently, but sadly this doesn’t appear to be the case.
I discovered that for myself when I attempted to contact the House of Fraser media team.
Responsible companies are quick to respond to questions from the press as they know that if they don’t it could hurt their reputation.
However, when I emailed House of Fraser, the reply to my message was an automatic response, which simply said: “We are unable to respond directly to each request. If you do not receive a personal response within 48 hours we have been unable to help you at this time.”
That is not only unhelpful, it’s also arrogant.
The only presumption I can make is that the firm isn’t interested in trying to help.
I remain hopeful that when the chain gets its act together following the takeover, it will play fair and issue replacement cards to the full value of those that KS and many other customers had.
But there is no guarantee of that. For that reason – and the existing problems of short-dated retailer giftcards – I hope that anyone who buys them as gifts this Christmas or any time in the future bears my warning in mind. One thing is for certain – there are many more stores likely to get into trouble or go bust over the coming months and years. Avoid giftcards and you’ll avoid being lumbered with a card that may well prove to be completely worthless when these closures occur.
OUTCOME: Reader left confused and worried about £280 House of Fraser owes him
Simon Read is a a money writer and broadcaster. He was personal finance editor at The Independent and is an expert on BBC1’s Right On The Money.
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