A recent article from The Boston Globe, reprinted in The Globe & Mail on Tuesday, answered exactly what I had wanted to know about the advent and growing popularity of gift cards.
Though paper credit notes and merchandise certificates may seem easier to misplace (or to be confused with store receipts), they are noticeably lighter and easier to carry in one’s wallet than a dense piece of plastic. Moreover, with their ease of use – swipe and go, without the need for a signature – it’s very easy to forget that the cards stand for cash. I would think it natural for many people to discard gift cards that lay unused and dormant in their wallets over time to lighten the load, or to simply let unused balances expire, instead of attempting the hassle of having to physically visit the store to inquire about surplus funds. I figured companies had to be making a fortune from a general public too lazy to use up their two cents, so to speak. But how much?
From Jenn Abelson’s article:
“About 23.3 million Americans have unused gift cards from last year’s holidays, according to an October study by Consumer Reports. Of the people who received gift cards in 2005, 19 percent of them have not used one or more of the cards nearly a year later. Tower Group estimates that the value of unredeemed gift cards has now grown to about $8 billion over several years…Retailers typically don’t count the cards as revenue until they are redeemed, but the growing number of unused cards has prompted some merchants to refine their bookkeeping. In June, Home Depot said it had sold more than $40 million in gift cards in recent years that it concluded were unlikely to be claimed. The home improvement chain recorded the money as income, making millions of dollars for selling nothing but cards of plastic.”
Unbelievable. Who knew that financial apathy (with a side of shrewd corporate design) came with a price tag of $8 billion?