By Colleen Chen, NEWS 9
OKLAHOMA CITY -- Many of us have already started shopping for the holidays, and gift cards have become an easy gift choice for many. But, consumers need to watch out this holiday season so their gift cards still hold a value.
With more big businesses filing for bankruptcy, redeeming gift cards could get tricky, which means holiday shoppers need to pay close attention.
"Chapter 11 really sort of puts up an insulation between them and creditors, and says put everything on hold," NEWS 9 legal analyst Irven Box said.
But as a consumer, holding a gift card is sort of like being an unsecured creditor. That means gift cards can become useless when a company goes bankrupt. Like in the case of The Sharper Image where more than $60 million in gift cards went up in air.
Companies like Circuit City, who file Chapter 11, can ask bankruptcy courts to allow them to honor gift cards, but they don't always get ‘yes' for an answer.
So far in Oklahoma, Circuit City, Linens and Things and Harold's have been allowed to accept gift cards, but the Better Business Bureau still suggests consumers stay smart if they decide to go with gift cards.
"If not a little extra research, a lot more thought. You need to make sure it's a reputable chain store that will be there after the holidays," Bob Manista of the Oklahoma City Better Business Bureau said.
Research from the Tower Group indicates gift card holders have already lost $75 million dollars due to store and restaurants closing, and estimates it could hit $100 million before the year is over.
Thankfully, there are sites like leveragecard.com where you can buy gift cards from a long list of stores that are backed by gift card bankruptcy protection.
Experts say the best advice any holiday season is to spend the gift card quickly to avoid losing the value. Many people lose their gift card's value simply because they don't spend them before they expire.
In Oklahoma, there is a state law which says companies need to honor cards bought before a bankruptcy filing. However, federal bankruptcy court rulings usually supersede state rulings.