ConsumerWatch: Corporate Takeover Could Make Gift Cards Worthless

CASTRO VALLEY (CBS 5) – If you have an unused gift card sitting in your drawer or wallet, you should think about spending it – and soon, says the California Department of Consumer Affairs. Cards issued by stores that get taken over, or go out of business, can become worthless almost overnight.

Deacon Peter Towle of Castro Valley found out first hand. Last month, Towle won a $25 Blockbuster gift card at a charity event. But when Towle went to his local Blockbuster to redeem it, the card turned out to be worthless.

“I presented it for payment and the clerk said ‘We don’t honor those,’ Towle told ConsumerWatch.

When Towle asked if the card could be used on-line or at a kiosk, he was also told no.

Mark Lumpkin, of Dish Network, the company that purchased Blockbuster earlier this year, called Towle’s situation “unfortunate.” Lumpkin said that when Dish purchased Blockbuster, it only bought certain parts of the company, and the gift card operation was not among them.

California has strong protections for gift card holders, except when stores get taken over or go out of business, according to Kimberly Brown of the state’s Dept. of Consumer Affairs. Brown advises consumers to use their cards quickly to avoid possible problems.

“It’s best to just use them,” Brown said.

Deacon Towle isn’t completely out of luck. After ConsumerWatch called the company, it offered Towle three free months of its Blockbuster by Mail service as compensation.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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