The growing number of business bankruptcies is prompting a warning for consumers when it comes to gift cards — use it or possibly lose it.
Calgarian Katie Wilson recently went to use $250 worth of gift cards she had received for her wedding at Bed Bath & Beyond.
She knew the retailer’s Canadian locations were shutting down, but she thought since the stores were still open she could use her cards.
She was wrong.
“We went to use our gift cards and were told unfortunately that we weren’t able to anymore,” she told Global News. “We contacted BBB to see what kind of options we had about getting our money back for it and we kind of hit a wall.
“It was really frustrating. We were really looking forward to be able to use our gift cards.”
Bed Bath and Beyond customers were able to use their gift cards — but only up until March 9.
The retailer did post that on its site, as well as send an email to customers signed up for offers. Wilson said she wasn’t one of them and had no idea.
She did know Alberta has long-standing and specific rules around gift cards and thought business bankruptcies would be included.
“We thought in Alberta we were more protected with our gift cards, that we didn’t have to use it right away,” she added.
“It was quite a surprise to learn that with bankruptcy you aren’t able to use the gift cards.”
The rise of business bankruptcies or insolvencies over the last number of years has been significant and 2023 is shaping up to be another year of losses.
Licensed insolvency trustee David Lewis with BDO Canada told Global News there is not much a consumer can do if a business shuts down and they have unused gift cards.
“In most cases when a business closes, their gift card is basically worthless,” Lewis said.
Lewis said consumers may decide to join the insolvency, but it’s a tough go.
“The consumer could file a claim in the bankruptcy if they know the amount that’s left on the card,” he pointed out. “However, pennies on the dollar is typically all they’re going to receive back.”
Lewis said consumers will be added to the list of creditors, which is often a long list.
“You’re at the bottom of the list. Really.”
He recommended other, simpler options, such as using the gift card or trading it. But again, it has to be done before the business goes into liquidation.
“If you don’t like the gift card because it’s not somewhere you go, there are lots of different sites where you can trade them for something else,” he said.
“Trade it and use it for something instead of losing it entirely.”
Wilson contacted Bed Bath & Beyond several times to find out what she can do with her gift cards. She said she had been told she can use them in the U.S., where the retailer is still operating.
Still, like Lewis, she recommended consumers use caution when it comes to any gift card.
“If you have any gift cards kicking around in your wallet, use it right away. Use it before something like this happens.”
Lewis went even a bit further with his advice — especially for any gift-givers.
“If you’re considering a gift card to give to people, maybe consider cash instead.”
Bed Bath & Beyond is expected to fully wrap up operations in Canada by the end of April.