Paula Phipps of Hernando, Mississippi, appears to be stuck with a worthless gift certificate.
She sent me an e-mail that says:
"My husband gave me a $95.00 gift certificate for my 66th birthday (to a Southaven spa)...Several months later, they closed the place...Now, Andy, I don't like being swindled!"
Well, Paula, you weren't exactly swindled, but you might as well have been. You're a victim of a common problem with gift certificates in this lousy economy.
You see, a gift certificate is considered to be an UNSECURE CREDIT. You're basically fronting cash to that retailer on the promise it will honor the certificate at some time in the future. Well, the business can't keep that promise if it goes out of business!
Gift certificates often have bizarre restrictions, too -- like EXPIRATION DATES, PRODUCT/SERVICE RESTRICTIONS that allow you to use them only with certain items and NO REPLACEMENT if they are lost or stolen.
What I tell people is if you're going to buy a gift certificate for someone, USE YOUR CREDIT CARD. That secures the purchase. If the business fails, you can contest the charge with your credit card company and have the charges reversed.
This same situation happened to me two years ago. I bought a spa package gift certificate for my wife for her birthday. The spa, which was run by a former Germantown police officer, went out of business and that owner skipped town! But since I used my credit card to buy the certificate, I made one call to my credit card company, and it cancelled the charge.