Gift Cards: Money for Nothing

Image by: Kelly Sutherland

What is it about a fool and his money?

Said Shakespeare’s Hamlet: “Thus conscience doth make cowards of us all.” On the topic of gift cards, he had nothing. “Thus Christmas doth make morons of us all,” would be good. Or there’s always the one about a fool and his money.

I recently bought a digital camera at London Drugs. I probably would have shopped there anyway, but in this case the options were limited – I had a couple of London Drugs gift cards left over from last Christmas. Of course, I was free to shop around. London Drugs has plenty of locations.

Why do we do it? Why do we exchange liquid, infinitely versatile currency for dedicated, single-purpose gift cards in a straight-up swap? Does the psychosis of the holiday season lead to consumer derangement? Or have retailers stumbled upon one of those glitches in our collective software, one of those logical gaps that make us respond in ways that common sense could never predict?

There are aspects of public behaviour that defy rational explanation. The rise of text messaging is one; gift cards are another. Every culture has its oddities, practices that grow up in response to social traditions. Once a year, some Shia men cut themselves until their faces run with blood; the Torajan people of Sulawesi keep preserved corpses in their homes for years; Canadians buy gift cards at Christmas. In order to understand the craze for little plastic gift certificates (or paper ones for that matter), it must be viewed in the context of Christmas ritual.

Viewed through the lens of Christmas tradition, trading flexible money for inflexible gift cards is actually an attempt to create flexibility. As currency, a gift card does offer more liquidity than a battery-powered tie with a flashing Rudolph nose. The card represents intention – a store has been chosen for you, and there you may shop as you please. Cash, while infinitely more practical, is gauche; moreover, it appears thoughtless. A gift card takes the sting out of indecision; it proclaims that due consideration was given to pleasing its recipient.

From a consumer protection point of view, however, gift cards represent a failure – a timid surrender to marketing strategy. In a competitive market, one might have expected gift cards to evolve like customer loyalty programs of the “buy 10, get one free” variety. Since the gift card requires its holder to focus on a single retailer, it seems natural that some incentive be offered. The customer surrenders options and receives, say, a five or 10 per cent reward.

But retailers quickly realized this largesse wasn’t required. Thanks to Christmas gift-buying pressure, consumers demanded cards anyway, with no incentive to do so. On the contrary: gift cards actually came with expiry dates. Shoppers were trading money for its dairy equivalent. Or at least, that was the case. As of November 1, new legislation introduced by the BC Liberals makes gift card expiry dates illegal in this province, following on the heels of similar legislation in other jurisdictions. Some cards, such as phone cards and those with credit card branding, are exempt from the new law, as are cards sold by charities and single-product cards (for a haircut, say). The new law undoubtedly helps, but cards are still not cash.

Gift cards can get lost. Gift cards often end up with a few bucks left after a purchase, like the butt end of a cigarette – a potential three dollars off your next wide-screen TV, but more likely destined to be a bit of unearned store profit. And as I sit in a Kitsilano café writing these very words, I sip an espresso that I attempted to pay for with a birthday gift card. “Sorry,” I was told, “the system isn’t working today.”

I paid cash. That worked.

• Tags
  • steve burgess, 
  • Gift cards, 
  • gift card expiry, 
  • consumer protection, 
  • Christmas gifts, 
  • Retail