Consumer Chitchat

Gift Cards, Problem Packaging, ID Theft and More

Do you have a consumer issue that you'd like addressed? How about a tip or useful consumer Web site you'd like to pass along (please, no solicitations). Did you find unexpected restrictions or fees on gift cards after you tried to use them?

If so, you're not alone. Washington Post consumer reporter Caroline Mayer wrote about gift cards in this morning's Post. In Mayer's consumer blog, The Checkout, she has also tackled such hot topics as impossible-to-open packaging, unsolicited credit offers and identity theft insurance.

Mayer was online Friday, Feb. 17, at 1 p.m. ET to talk about these and other consumer topics. ID theft, warranties, credit cards, smart shopping on your minds? Speak now.

The transcript follows.

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Caroline Mayer: Hello all..It's good to be chatting again.

As usual, there's lot's to talk about, including the story I wrote today about gift cards. I've already gotten lots of emails about the story--lots of readers telling me their tales or woe with the bank gift cards--those bearing the Visa, MasterCard and American Express logo. I've also gotten a handful of emails from people declaring their everlasting love for bank gift cards. So we can chat lots more about that today.

And we can up on lots of other issues as well, whether it's customer service, consumer tips or anything else on your mind. Meanwhile, I'd love to hear from readers who want to share any favorite Web sites with really good consumer tips and info.

So fire away!

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Philadelphia, Pa.: Caroline, very interesting article about gift cards. One other issue that needs to be addressed is using the card on a gift that is later returned. My mom used an American Express gift card at Hecht's to buy a Christmas gift for my wife.

Unfortunately, we needed to return the gift, and even though we had a receipt, the cashier placed the balance back onto what we thought was my mom's "credit card." What we did not know was that it was a gift card that had been thrown away when she had spent the entire balance. Luckily, the store manager was sympathetic and we received store credit.

But please remind your readers to be cautious when using these cards for something that you might return. If the gift is returned, the money might be lost forever.

washingtonpost.com: Bank Gift Cards Come Wrapped With Limits (Post, Feb. 17)

Caroline Mayer: You raise a very good point; thanks for writing in.

Here's the deal--as I learned while writing this story--don't throw away any gift card even if the balance is zero--unless you are absolutely positively sure you are not going to return the item. Because many stores will want to credit any return on the card with which you made your purchase.

Having said that, though, I hasten to add that I've heard from store clerks that if you have destroyed/lost your card, there are ways to get your money back. It's more hassle for the clerk--and you--but they should at very least be able to give you a gift card from the store itself.

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Washington, D.C.: How can you get a fee on a bank gift card? Isn't that not the point?

washingtonpost.com: Bank Gift Cards Come Wrapped With Limits (Post, Feb. 17)

Caroline Mayer: Bank cards have fees in two main ways as best as I can tell.

For most, there is a fee to buy the card--from $3.95 to $5.95, sometimes more. The reason they charge that fee is that the banks make relatively little money on these cards. The banks only get a small percentage 2-3 % of the transaction; stores usually get larger profit on their own cards because of course, you're buying an item from the store that has a markup on that item to begin with.

The other prevalent fee happens if you don't use the card soon after it's purchased. Some banks charge a $2.50 a month fee several months after the card has been dormant. A lot start charging that fee after 13 months of disuse..

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Cleveland, Ohio: Regarding your story this morning, doesn't it seem awfully fishy to you that the companies issuing gift cards would say they weren't aware that the cards couldn't be combined with cash? I can't imagine they didn't know this, and I can't imagine no one ever complained until the Post showed up asking questions.

Caroline Mayer: Considering American Express and Master Card both knew of the problem and said they were installing new technology to correct it, I was surprised that Visa said it didn't know of the problem before my phone call.

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Madison, Wis.: Hi Caroline, Just a recent experience. My bank recently changed hands and, unknown to me, at that changeover revised their overdraft policy. Previously, if you overdrafted by more than $25, you were not allowed to draw on the account and were charged a small fee. This was changed to allow the consumer to overdraft by up to $600, but each time you drew on the account you were charged $30. I ended up racking up over $250 in fees over just a couple of days because I was not immediately aware that I had overdrafted. I was distressed and irate. I argued with the bank until they removed 4 of the 9 fees but they claimed that they did this as a "service" to their customers. I told her that this was actually a service to the bank. If it was a service to the customer, they would charge no more than 1 fee and not let me try to draw funds from an empty account. Yes, we should all be perfectly responsible and check our account balance everyday but I faltered. Can you think of any way that this is a service to me and not a way for them to pull in more of my money?

Caroline Mayer: The only way I can figure out that it's a service to you is it got your attention. Wow. Sorry to hear about your experience.

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Arlington, Va.: What do you think about store credit cards? I know sales people have to "sell" you on opening store credit cards, but I have to think that having more debt with interest can't be worth saving the 10 percent. Unless you can pay it off every time, I suppose. Your thoughts?

Caroline Mayer: I almost always decline those cards, even if they come with big savings. The reason: every time you open a new account, it goes on your credit record and the more credit-card accounts you have on your record, the more your credit-score could be adversely affected. And you know what that means--higher interest rates when applying for loans.

Of course, if the savings are huge (let's say several hundreds dollars--I'm in the market for new kitchen appliances so I'm thinking big bucks here), then of course, that new account may be worth it once in a while. It all depends on your own financial situation and whether you intend to seek a loan anytime soon.

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Virginia: Can we talk Internet security? I know we've come a long way in recent years past on this, but how secure do you feel Internet shopping really is these days?

Caroline Mayer: Secure enough that I do it quite a lot--probably too much, according to my dwindling bank account.

Of course, it's best to stick to well-known merchants. If you're leery, then don't do business with an Internet site that you don't know much about or can't check.

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Everywhere, USA incl. offshore: Hi, are there still any consumer regulatory agencies in the government exercising any oversight and taking action? There is an avalanche of anti-consumer activities: who can comprehend a phone/cable/utility/bank bill? How can cable TV continuously raise their govt. granted monopoly prices with no restraint? Stores automatically deducting 're-stocking fees' from clothing returns? There is no such fee in the store. Everybody needs a constant personal lawyer nowadays to review every transaction. Thanks.

Caroline Mayer: You're right--there's not a whole lot of oversight. There's some from some federal agencies (Federal Trade Commission, Federal Communications Commission etc). and if you're lucky to live in a county like Montgomery County with a good consumer-protection office, even more oversight and one that takes on individual causes.

Otherwise you're pretty much on your own.

But having said that, I'd also like to add there's also the media which can be an effective watchdog by publicizing troublesome and questionable practices. I also think the Internet has done wonders in helping spotlight some of these as well, as in this chat.

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Washington, D.C.: The issue of fees eating up the balance on bank gift cards is definitely a huge issue - although it's hardly exclusive to bank gift cards. Many store gift cards also deduct fees after "periods of inactivity." Also, any cashier worth his/her salt should know how to do a split tender - in college I worked in many retail and quick service food establishments and always learned how to do a split tender in the first day or two on the job. The issue is that the customer must know the balance on the card in order for the split tender to be successful - and I really don't see how this is too much to ask. You keep track of the balance in your checking account - at least, you should. I get annoyed as a customer when the person in front of me takes ten or fifteen minutes of the cashier's time arguing about how much should be put through on the gift card, and this happened a lot in post-holiday shopping. There is no way for the cashier to know how much is on your bank gift card, and it is not their fault.

Caroline Mayer: You're right. I feel the pain on many store clerks when it comes to this issue. But sometimes it is hard to know what's left on the card, especially if there are unexpected fees, like dormancy fees or sign-up fees you didn't expect on a $50 card...So I think the banks, retailers and consumers need to work together on this to work this out.

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Rockville, Md.: I used to work as a part-time associate at a retail store. We had this problem a lot with American Express gift cards when customers wanted to use a card for only a portion of the purchase. To make it work, all we had to do was call the phone number on the back of the card to get the remaining balance. Then we "charged" that exact amount of the purchase to the gift card and used another payment method for the remainder. It was a hassle, but it worked.

Caroline Mayer: A lot of people--clerks and customers-- have learned the hard way how to solve the problem. I hope this story will bring it to more people's attention so fewer stores and shoppers have complaints.

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re: Credit score ...: But if you have more credit cards and pay them all of on time each month, wouldn't that just increase your credit? Or do I just have that plain backward?

Caroline Mayer: I think it all depends...if you can do that that's good--but oftentimes, the creditor doesn't list how much outstanding credit you've got, so a lender taking a look at your credit history may only see that you paid a $1,000 bill on time--and not that you only took $1,000 out of a $10,000 credit line. so they don't see that you've got increased credit necessarily--just increased debt.

It's all very complicated, and not all of this makes sense.

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re: Internet Security in Virginia: Whenever I shop online, I use a shop-safe number. If you can access your credit card's Web site, you probably have access to this feature--it generates a random number for a "credit card" that is linked to your account. You set the credit limit and expiration date for it--I usually make the limit $30 or just over whatever I'm purchasing online (to account for tax, shipping, etc) and make the expiration date two months in the future. It works beautifully, and you don't have to worry about some sketchy merchant stealing your account information!

Caroline Mayer: The virtual credit card number that you mention has been slow to catch on with the public but people worried about security use it a lot. Thanks for sharing the info.

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Washington, D.C.: One thing I didn't see in your article is the complexity of using these bank cards for Internet purchases. I recently received two $100 Visa gift cards and the instructions say you have to register them with a web site before you can use them on the Internet. Even so, I don't think it is possible to combine them for an Internet purchase. For example if I wanted to buy a $300 item on the Internet, I don't see how I would put the two $100 gift cards against that purchase and put the remainder on my credit card. Also, if issuers of these cards really wanted to be consumer friendly, they would allow you to use these cards as ATM cards and just withdraw the cash--like a cash advance on a credit card.

Caroline Mayer: Good points. Maybe the companies will read this and address your concerns.

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Washington, D.C.: What are some of the biggest scam stories you've heard? Any involving local merchants that we should be aware of?

Caroline Mayer: Right now, most of the scams I'm hearing about are supposed sweepstakes and lottery "winners"--people told they'll get $$$$ if they first send in money-and lots of it. And a lot of people have fallen for that.

Similarly, I've heard of some horrible stories of people who have sold items over the Internet, with purchaser sending a check or money-order. Often the amount is for far more than the purchase and the purchaser has some excuse for that but asks the seller to return the money through a wire, usually Western Union, usually to a foreign country (often Nigeria).

The money is wired--before the bank informs the seller that the check/money order was phony, so the seller is out lots of $$$.

I've heard of one scam where this happened-but the purchaser in this case sent the right amount of money, but then decided he didn't want to buy all three items, so asked for part of the money back.

No local merchants or people involved.

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Washington, D.C.: What's the range of consumer issues you cover? What's next?

Caroline Mayer: I cover everything--or so it seems. Seriously, it's easier to say what I don't cover--subjects, already well covered by my other colleagues (food,drug, real estate, communications...) But I still often end up writing about these issues as well if there's a consumer impact. I seem to be spending a lot of time on credit issues lately whether it's bankruptcy or gift cards.

Not sure what's next. I have to clean off my desk and see what story rises to the top--unless you all have any great ideas so I don't have to clean my desk!

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Falls Church, Va.: I just took the remaining balance on my card and threw it in my gas tank, just a suggestion if you're worried about getting use out of every last cent on your gift card.

Caroline Mayer: I assume you meant you used it to fill your gas tank. You're lucky you were able to do that; the fine print of some of the cards suggest it would be difficult to use these cards, at least without having to go inside to pay for gas. If you pay outside, using the automated machine, the purchase is often "preauthorized" for $50 to $75, so if you're cards for less than that, it may be rejected-even if you don't intend to spend that much on gas. Of course what you don't spend is reverted back to the card, but the fine print notes that it's often several days before that happens. That by the way also happens on credit cards and debit cards as well.

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re: gift cards ...: If we have Filenes gift cards, will we be able to use them at Macy's once there's no more Filenes?

Caroline Mayer: Don't know specifically, but they should. I know here in DC the Hecht's cards are supposed to be good at Macy's so think the case should be the same. If in doubt--either call store or spend now.

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Arlington, Va.: I have an interesting thing that came up in regards to gift cards. I got a $50 VISA gift card for signing up with a national bank. Apparently they report this as interest income to the IRS. So come December I received a notice saying that $50 was reported to the IRS as interest income. However because inactivity fees kicked in after six months and I hadn't used the card by then I had something like $40 on the card. So the IRS thinks I got $50, but I can only use $40 of it. I called the Bank to get them to send me a new interest report of credit my gift card, needless to say it didn't work out. Have you encountered this at all in you research?

Caroline Mayer: You're the first to report that. Can you tell me the name of the bank and I'll look into it--write me at thecheckout@washpost.com

Thanks.

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Caroline Mayer: Well folks, that's all for now. If you read this belatedly, or have other news to share, please feel free to write me at thecheckout.com

Thanks

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