Gift vouchers, are they really such a gift?

Gift Card

Over the last few months there have been several big businesses which have hit the buffers in terms of financial problems leading us to ask; is it really a good idea to buy gift vouchers or cards?

When you buy a Gift Card or Voucher (they are the same thing!) it is best to think of it as giving the retailer money upfront so your recipient can buy what they want, when they want it. Firstly, nearly all retailers now have a time limit on the use of such vouchers, generally 2 years although increasingly 12 months or less is common; if the voucher or card is not used within that time, the money is lost.

Gift vouchers cannot normally be exchanged for cash, even if the recipient purchases an item then subsequently returns it, the refund will be back to a voucher; this can be more complicated where online purchases are made as refund restrictions may mean money is returned to an online only account.

Should a company go into administration then it is up to the Administrators to decide whether vouchers will be accepted, we recently saw this with House of Fraser where initially vouchers were accepted but on sale of the business the vouchers became invalid; customer had to join the queue of creditors, meaning the vouchers are currently worthless. Where a voucher was purchased by a credit card and the value is in excess of £100 then a claim might be possible by making a S75 Consumer Credit Act 1974 claim through the card issuer or bank; unlike a purchase of an item or service Section 75 claims are more difficult for voucher claims. Claims can only be made by the original purchaser not the recipient, leading to some awkward conversations!

If a voucher has been purchased through a third party, for example a supermarket, then you might be able to approach them for a refund; whilst you are not legally entitled to your money back if you don’t ask you don’t get.

Gift cards and vouchers have grown in popularity in recent years however we would recommend if you really cannot decide on a physical gift why not send a cheque instead? If you don’t have a cheque book your Bank or Building Society may be able to help or for a small fee the Post Office still issue Postal Order which can be banked as cash. There are also a small number of prepaid debit cards on the market which can be purchased and used most locations which accept payment cards, some fees may apply.