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Ellen Roseman: Beware gift cards when the retailer expires

Beware of stores selling gift cards and coupons to be used at a future date. They can be toxic if the retailer goes out of business before you get a chance to use them.
 
A women's wear chain called Tabi, for example, is going into receivership. Even before closing its 76 stores in Canada, it told employees to stop accepting gift cards and store credits, as of March 29, 2011.
 
That didn't sit well with customers, many of whom are senior citizens and had received gift cards last Christmas. They ask why a 20 to 40 per cent off store closing sale, advertised at the company's website, says nothing about gift cards not being accepted.
 
Unfortunately for customers, they're at the end of a long line of creditors when a retailer goes into receivership. It's rare they retrieve any money lost on gift cards, credits or vouchers.
 
That's why I prefer paying with a credit card. You have more protection when a retailer goes under, leaving you with an outstanding balance for goods paid for and not received.
 
Take a food retailer called Organics Delivered that went under last month. Many customers were repaid when they submitted claims of non-receipt to their Visa, MasterCard or American Express issuers. PayPal also helps you if you didn't get what you paid for when a company folds.
 
You may start doing business with a retailer because you hear of an attractive coupon offer. This happens when you sign up for daily emails from websites such as Groupon, WagJag, WebPiggy, DealFind and so on.
 
Coupon websites are proliferating. You have to act quickly because the deals often last for only a day or two. Some pay for referrals through social media such as Facebook and Twitter, pushing the group buying frenzy.
 
A Toronto butcher sold a whopping 11,500 vouchers in a weekend when it offered $175 worth of organic meat for only $55. It had line-ups out the door of customers trying to redeem the vouchers.
 
Then, the store started limiting coupon redemptions and denying refunds. Customers were furious and put nasty comments online. Some wondered if the owner was looking for revenue to open a second store across the street.
 
My advice: Don't buy gift cards or coupons from a retailer you don't know or trust. And when ordering goods or services to be delivered at a later date, always use a credit card - not cash or cheques - to insulate yourself from a potential future insolvency.

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