SHOPPING A caveat on gift certificates: Use 'em or lose 'em

Do you have a gift certificate? Cash it in. Soon.
By JEFF GELLES
KNIGHT RIDDER NEWSPAPERS
Kyra Sutton went shopping recently at a Zany Brainy store near her home in Lower Merion, Pa., planning to use a $20 gift certificate she got for her birthday last year.
There was one hitch, though, which she discovered at the checkout counter. The certificate wasn't worth $20 anymore. It was worth $16.
Store employees explained why: The certificate was 14 months old, and, after it went unused for 12 months, the upscale toy retailer started deducting a $2-a-month "service fee."
If your Christmas stocking had any gift certificates inside it, you'll want to pay close attention to what happened to Kyra. Zany Brainy isn't alone in imposing use-it-or-lose-it conditions.
To many people, gift certificates and their credit-card-like cousins, gift cards, seem "better than cash" -- a bit more personal, a bit less likely to be frittered away instead of used to buy a gift.
But the same computerized convenience that has made gift cards so common can also make cards and certificates less valuable, by making service fees and expiration dates easy to enforce.
In eight more months, the value of that $20 Zany Brainy gift certificate would evaporate to zero. Even Brazilian currency would be a better bet.
Caught unawares
Consumers are often surprised that gift certificates and gift cards can lose their value. But laws in many states -- California and Massachusetts are notable exceptions -- appear to allow it.
This year, for example, New Jersey enacted a law governing gift certificates' expiration. It says they remain valid indefinitely unless terms and conditions are disclosed to the purchaser and "conspicuously printed" on the certificate.
In Pennsylvania, if the gift certificate expires, the store still doesn't get to keep the money that was paid for it.
Two years after a certificate expires, or five years after the issuance of one with no expiration date, it becomes "unclaimed property," much like money in a dormant bank account, and is taken by the state under escheat laws.
And, as with unclaimed bank deposits, if you can prove ownership, you can get the money back.
Of course, Zany Brainy's "service fee" approach sidesteps unclaimed-property laws, which is probably why such tactics are increasingly common.
Barnes & amp; Noble uses a similar approach. Its gift card says: "After 18 months of non-use, a $1.50-per-month dormant account fee will be charged, except where prohibited by law."
On the other hand, Borders Books Shops' cards state that the card is void after two years.
Are tougher laws needed?
Should states come down harder on gift certificates written in disappearing ink? Massachusetts requires that they be good for at least two years from purchase. Since 1997, California hasn't allowed most gift certificates to expire at all.
Stronger laws would undoubtedly be welcome to Kyra Sutton's mother, Andrea Casher, who says she doesn't understand how merchants can justify reducing a gift certificate's value.
To Casher, such policies seem backward. Stores already benefit from having their customers' cash in advance, and they benefit more the longer the certificates go unused. They also undoubtedly benefit from cards or certificates that are lost or forgotten and never redeemed.
For the consumer, Casher says, "it's like double jeopardy. You're losing money because of inflation -- because prices may have gone up a year later -- and then they're reducing the cash value of the gift certificate."
Unless the laws are changed, there's only one thing you can do. Don't let gift cards or certificates sit unused, unless you've checked closely on their terms and conditions.
It's a new riff on an old tune: Buyer -- and recipient -- beware.