Bankruptcy and Gift Cards

This AP article dated March 3, 2008, ”Bankruptcy Makes Gift Cards Worthless,” is one of several that I have seen along similar lines recently and serves as a good reminder that, notwithstanding a variety of attempts to protect consumers who use gift cards (including limits or outright bans on expiration dates, which about 70% of states now have in some form), consumers can still be vulnerable to total loss in the event of the issuer’s bankruptcy. The article also highlights some fairly ingenious efforts on the part of competitors to take advantage of the situation (and attract new customers) by honoring those otherwise worthless gift cards, at least in part.