mi-bc-110503-atm-fraud5

Bruce Cran, of the Consumers' Association of Canada, says up to 40 per cent of gift cards never get used. ((CBC))

A consumer watchdog is advising against giving gift cards this holiday season, saying they often go unused and put restrictions on recipients.

"Actually, if you see a gift card hanging on the wall, you should run in the opposite direction," said Bruce Cran, president of the Consumers' Association of Canada.

Surveys show 86 per cent of people like giving gift cards, but only 40 per cent of people like receiving them.

As a result, up to 40 per cent of gift cards never get used, making retailers the only winners, said Cran.

"In most cases there's no discount or benefit given at all," he said. "You're actually giving your cash to somebody other than the recipient.

'You'd be far better off to give them a cheque, or a little bundle of money.'—Bruce Cran, Consumers' Association of Canada

"You'd be far better off to give them a cheque, or a little bundle of money, or whatever you want to do."

Many people also end up throwing their cards out before they use the full amount, said Cran.

"Some people who phone here want to know how to get the last bit. We say if it's a shoe store, go in and buy boot laces, whatever you have to do."

In addition, although the association successfully advocated for gift cards not to have expiration dates, companies have "all sorts of little tricks," said Cran.

He urges people to read the fine print before buying any cards.

Jan Small, of Saint John, said she recently got an embarrassing lesson in marketing when she purchased two $25 Petro-Canada gas cards as a gift for a family member.

nb-gift-card-220

People should read the fine print on gift cards. (CBC)

When the recipient tried to redeem them, he discovered the cards were 10-cent a litre savings cards that don’t hold cash value, said Small.

"They came back to him and said 'We are going to credit $4 on your gas card, your gift gas card and you owe us $47.' So this person had no money. So I get a phone call at home, and asked if this is what I intended. I did not. I never would put a person in that kind of embarrassing situation."

Small contends the cards are misleading and shouldn't be sold with other gift cards in stores.

"I said if I really wanted to do that I could have gotten him a couple rolls of dimes," she said.

"I wanted to give the person a card that would be able to put gas in his car. Instead, I embarrassed the poor person thinking he was going to be able to get the gas but couldn't."

Michael Southern, a spokesperson for Petro-Canada's parent company, said the so-called preferred price cards are meant to provide variety for customers.

Petro Can also offers cash value cards, he said, adding that if customers are confused, they should take their concerns to the company's customer service department.

The Consumers' Association of Canada has reported the situation to the Competition Bureau, an independent law enforcement agency that polices false advertising, said Cran.

"I'm still scratching my head, even in the explanation they were giving," he said.

"They were talking about savings. There's absolutely no savings here for anybody. You pay $25 for the card and you get $25 back, but over a long period of time.

"And who this benefits, other than the corporation in getting higher sales, I can't think. There's certainly no benefit for any consumer here.

"It's absolutely ludicrous."