Consumer Reports is warning shoppers against giving gift cards this holiday season, saying American shoppers failed to redeem gift cards worth a total of $8 billion US last year.

'Gift-givers and recipients alike need to be aware of the pitfalls and make sure that precautions are taken so that the recipient gets the gift and not the retailers.'—Tod Marks, Consumer Reports

"It's easy to understand the appeal of gift cards. They're the perfect no-muss, no-fuss gift for the finicky family member or friend. It's a no-brainer," said Tod Marks, senior editor at Consumer Reports, in a release issued Monday.

"But gift-givers and recipients alike need to be aware of the pitfalls and make sure that precautions are taken so that the recipient gets the gift and not the retailers."

The New York-based magazine in a recent poll of 1,003 participants found 27 per cent of people given gift cards last year hadn't used them a year later. Of those who hadn't used their cards, 32 per cent of respondents said their gift cards had expired, were lost or forgotten. Another 58 per cent said they didn't use their cards because they didn't have time to go shopping.

The magazine on Tuesday published a full-page ad in the New York Times, urging consumers to think twice before giving gift cards, saying it can amount to "easy money" for the retailers and a loss for consumers.

A 2006 Statistics Canada study found that 82 per cent of the country's largest retailers offering gift cards in 2005. The study suggested gift cards have grown in popularity for time-starved shoppers seeking convenience.

Ontario and Manitoba both prohibit expiry dates on gift cards.

The magazine suggests recipients register the cards, spend them quickly and continue to spend until the balance reaches zero.