The dark side of the gift card industry

It seems a great gift, but sometimes it becomes a holiday horror show — to the tune of $1 billion wasted.

Holiday gift cards are sometimes given with little thought to whether the recipient will actually use them.

“Be sure that the person you are giving the card to is really interested in it,” says Bill Hardekopf, the founder of LowCards.com.

Hardekopf, for example, loves fantasy baseball and would enjoy a related gift card, but he isn’t crazy about chairs. “It would be a waste if someone gave me a gift card for a furniture store,” he says.

Besides the fact that they can be an inappropriate present, gift cards are also sometimes never used.

The researchers CEB TowerGroup said consumers spend about $130 billion on gift cards a year, but about $1 billion is lost.

The billion dollars is burned up through non-use or spending part of the balance, then letting the rest lapse.

And now it’s drawn the attention of an Albany watchdog.

New York State Comptroller Thomas DiNapoli says consumers should read the fine print on these cards to spot fees.

While some sellers have ended inactivity fees, consumers should still ask whether fees apply as well as expiration dates when they purchase a card. Many don’t.

“Last year my office received nearly $12 million from dormant gift cards,” DiNapoli said. (Money from unused gift cards issued by New York businesses is turned over to the state comptroller’s office as abandoned property after five years of dormancy.)

“I encourage New Yorkers to read the terms when purchasing or receiving gift cards.”

Those receiving them now have more time to understand them.

Gift cards, according to the Card Act of 2009, cannot expire within five years from the date they were activated and fees on gift cards are generally limited except in certain circumstances, such as if there has been no transaction for at least 12 months, DiNapoli said in the statement.