Shoppers issued huge Christmas gift card warning for presents this year
SHOPPERS have been warned to avoid giving friends and family gift cards as Christmas presents this year.
Gift cards can seem like a great present, especially if the recipient is particularly difficult to buy for.
But shoppers are being urged to think twice before picking one up because their money could end up being wasted.
This is because there's no guarantee that you'll be able to use them if the card's retailer were to collapse into administration.
Lisa Webb, Which? consumer law expert said: "If a retailer you have a gift card for goes bust, you may struggle to get your money back.
"You can try to make a claim in writing to the administrators with proof of your vouchers.
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"But before you do this, it is worth calling or visiting the store to check if the voucher can still be used."
Over the past few years, big-name retailers, including Wilko, Paperchase and M&Co, collapsed into administration.
While retailers like Wilko continued to accept gift card payments, this isn't always the case when a retailer collapses.
Some shops, including Topshop and Miss Selfridge, only allowed customers to pay 50% of their total order using gift card credit after they fell into administration.
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Shoppers had to fund the other half of their purchases with their own money.
Administrators may refuse gift cards at any point in a bid to save a troubled business.
That's what happened with Paperchase when administrators gave shoppers just two weeks to use them before saying they would no longer be accepted.
More reasons to avoid gift cards
Some gift cards come with expiration dates or fees that can reduce their value over time, potentially leaving the recipient with less than the intended amount.
Sarah Coles, senior personal finance analyst at Hargraves Lansdown, said: "Even if the shop sticks around, gift cards are massively flawed. There’s the risk it doesn’t get spent before it expires.
"An estimated £300 million in vouchers and gift cards expires unspent every year."
What are your rights if a retailer collapses?
IF you have a gift card for a retailer that goes bust, you could find it hard to get your money back.
Senior Consumer Reporter Olivia Marshall explains your rights.
When a firm collapses, administrators are brought in and they view customers as gift cards as creditors.
First of all, you should go to the shop and see if you can still use your voucher as some administrators will honour the purchase.
But otherwise you'll have to make a claim in writing with proof of your vouchers.
So, to get your money back, you’ll need to make a claim in writing to the administrators with proof of your vouchers.
If the gift card was purchased through a third party, you could also approach that business for a refund.
You won't be entitled to a refund but they could still repay you.
If you do decide to look for a gift voucher idea for someone else, you'll want to check the expiry date to make sure the recipient still has enough time to spend it.
Look on the voucher issuer's website or get in touch with its customer service team to clarify if you're unsure.
There are several retailers whose gift cards expire after a few years, so if you've had one for a while you may want to check it's still in date.
For example, M&S gift cards are valid for 60 months from activation (or when you first used them).
John Lewis and Sainsbury's gift cards only last for 24 months - this is from purchase or last use.
Sarah added that it can be challenging for the recipient to spend the exact amount.
"On average, people using gift cards spend 40% more than the value of the voucher, so it ends up costing them money," she said.
On the flip side, there is a risk that the recipient may not fully use the gift card, leaving a remaining balance that goes to waste.
Plus, the recipient is restricted to using the gift card at a specific retailer, which you may have misjudged to be suitable for them.
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If you're struggling to think of what to buy for family members this Christmas, we've found Christmas stocking fillers for dads at prices starting from 97p.
Plus, here are six ways to give top Christmas gifts for less this year.
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