GIFT CARDS - Convenience That Comes With Cautions.

It's early Friday morning and I’m sitting in front of a window writing this post, not really accomplishing much because I'm too busy looking out at this absolute gorgeous scene.
 It snowed last night covering all the trees and bushes with a couple of inches of snow and I just had to take this picture. Doesn't it look like the setting for a Christmas card?

The timing for this picture couldn't have been better as this post deals with Christmas, specifically, gift cards. I never before realized there could be problems with gift cards, but, as I've found out, there can be. I've given gift cards to family members who weren't able to come for Christmas and to service providers like our mail-lady, but those cards were from one of the large retailers and never presented a problem. It wasn't that long ago that I heard about other types of gift cards, like the Visa gift cards, and I thought those were a great idea since they could be used almost anywhere. I didn't realize those cards could come with extra charges and conditions, such as activation fees, dormancy charges and expiry dates. Gift cards can also be purchased online and, while this practice comes with convenience, it also comes with quite a few cautions. I have always believed that the more information you have about a product, the greater the chance of avoiding problems, therefore I thought I would just dig into the gift card business a bit and get the facts, starting with the Ontario gift card regulations as follows:

1. Gift cards from retail businesses - Retail gift cards cannot have an expiry date which means they can be used to full value at any time. There can be no purchase or activation fees and they are sales tax exempt at time of purchase. All restrictions and conditions must be visible and stated in plain language on the back of the card and must include contact information. 
2. Gift cards for specific services - This includes gift certificates for things like a hair-cut or manicure, etc. These may have an expiry date and lose its value if not used within the specified time frame.
3. Gift cards from shopping malls - Cards issued directly by retailers located in the shopping mall are treated the same as retail gift cards. Cards issued by the shopping mall can be used at any store in the mall. These cards may come with an one-time activation fee of a maximum of $1.50. They keep their full value for 15 months from the date of purchase - after that time the mall can apply a dormancy fee for a maximum of $2.50 per month which is deducted from the card's balance. A three-month extension can be requested by the cardholder before the card expires. All fees and expiry date must be clearly printed on the card. Its important to read and understand the terms and conditions before paying for the shopping mall gift card.
4. American express, Mastercard and Visa Gift Cards (not the prepaid credit cards) do not fall under provincial regulations - at this time, they don't seem to be regulated anywhere. This is expected to change soon but that doesn't help here and now. I spent the best part of three hours, online and by phone, trying to get a breakdown of the different fees charged plus a copy of the cardholder agreements, all without success. The best I can do is share the little I did learn: these cards have an activation fee which may be charged either to the purchaser or the recipient and these charges differ significantly from $3.95 to $9.95; there may be a monthly charge if the card isn't used within 6 or more months; and there is a fee to replace lost or stolen cards. Expiry dates and renewal procedures also differ a lot. To know if the card your're buying is the one you need, its a good idea to get the answers to the questions below before paying.
1. Are there any activation fees? Who pays, the purchaser or the recipient?
2. Is there a monthly fee?
3. Is there an inactive/dormancy fee?
4. Does the card expire? What happens to the remaining balance if it does expire?
5. Is the card reloadable and if so, is there a charge for reloading?
5. Online Gift Cards - Gift cards can be purchased online directly from retail outlets and if the store/site is a well-known, trusted one, like Amazon, there should be no problem, but buying from auction sites or online gift card exchange sites can turn out to be a major headache and caution should be applied. Before buying from any of these sites its a good idea to first read the information on Buying Online Gift Cards and for auction sites, read Buying Gift Cards Online-A Beginner's Guide-eBay.

I've checked the two Canadian Gift Card Exchange sites listed below and couldn't find any negative reviews for either one, but always check for yourself.
Gift Card Granny-Gift Card Exchange and CardSwap-Gift Card Exchange.

Gift card regulations for other provinces can be obtained by searching that province's Consumer Protection website.

Some more 'good to know' stuff:

Business closures: If a retail business is closed because of financial difficulties or bankruptcy, you can contact Industry Canada's Office of the Superintendent of Bankruptcy for information. Superintendent of Bankruptcy
Charged an illegal fee: You can get a refund for the illegal fee within 15 days by making a written or verbal complaint to the business. Its best to avoid this problem by asking for all the information before paying. Ontario Ministry of Consumer Services has information on how to write a complaint letter and also a step-by-step guide to filing a complaint.Ont.Ministry of Consumer Services
Consumer Alert - LCBO Gift Cards: LCBO and VINTAGES gift cards are being sold online at a significant discount. These are not authorized - LCBO only sells through its own website www.lcbo.com. Consumers should also be cautious when providing personal and financial information. Before buying discounted gift cards of any kind online, check with the business whose name is on the card to make sure the card is legitimate.
Consumer Beware - Gift Card Scams: Gift cards, especially those good for buying things online, have become the target of thieves. Thieves go to gift card racks and write down the card numbers. After a few days they call the toll-free customer service number to check the remaining balance on the card. Once they find the card has been activated, the thieves go online and start shopping with the stolen card. How to protect yourself:

• Buy gift cards from the person behind the counter if you can. Its safer than buying off the rack.
• Opt for gift cards that have a protective backing or a scratch-off PIN number so that only the purchaser can use it.
• Check the packaging on the back of the card for tampering before buying the card - if you notice a problem, inform the cashier..
• Always keep your receipts, which will usually show the card number and how much you have paid. Give this, along with the terms and conditions to the recipient along with the gift card. That way, if they have any problems with the card later on, or if the card is lost, they have proof of purchase.

Awareness and caution when buying gift cards will go a long way towards preventing problems. I think they will always be a popular gift for service providers and for friends and family in far away places, simply because they're so convenient. Our mail-lady will definitely be receiving another one this year.