Two in five people with gift cards for retailers that went bust in the past year were unable to spend their full balance, losing an average of GBP25 per voucher, Which? research has revealed.* Our survey of 2,000 UK consumers found an estimated two million people have unused gift cards that were given in the last year. In addition to retailers going bust, others told us they hadn't yet got around to spending their voucher or couldn't find anything they wanted to spend it on.
Gift cards might be an easy solution for those hard-to-buy-for family members, but they can be risky. If the retailer you've bought a voucher for collapses, the administrators can stop accepting gift cards entirely. Unexpected fees and expiry dates can also catch you out when you go to spend your vouchers.
Here, Which? looks at the scale of unspent gift cards and explains why you might think twice before gifting one this Christmas.
Shoppers left high and dry by bust retailers
A string of retailers have fallen into administration over the past year. Since the start of the pandemic, 7% of UK consumers have found themselves with a voucher for a retailer that's gone bust. And almost two-fifths (38%) of these consumers were unable to spend the full balance of their voucher.
One in five (21%) of those with vouchers for bust retailers had a gift card for an Arcadia Group retailer. Some of these retailers, including Topshop and Miss Selfridge, only allowed customers to pay for 50% of their order total using gift card credit after they fell into administration after Christmas last year. Shoppers had to front the remaining half with their own money.
Unfortunately, when administrators take over a collapsed company, they are legally allowed to refuse gift cards at any point in a bid to save the troubled retailer. We saw this with Debenhams when the administrators decided to stop accepting gift cards just before Christmas last year on 20 December. One in eight (13%) people in our survey said they had a voucher for the troubled department store.
Half of consumers' gift cards don't clearly state expiry dates
Gift cards normally have expiry dates, typically a year or two after the date of purchase.
But some retailers are better than others at clearly stating when the voucher will expire. Our research revealed half of people (53%) who received a gift card in the past year had an expiry date clearly stated while a quarter (27%) said the expiry date wasn't clear. It's worth double checking expiry dates on any gift cards you receive this year as not all retailers will be generous enough to extend them.
'We didn't have that special shopping trip'
Laura (a pseudonym) was disappointed when Marks & Spencer refused to extend the gift card she'd been waiting to spend during lockdown.
Her husband bought her a GBP100 voucher in April 2019. Following a car accident in 2015, Laura is her daughter's carer while also working as a civil engineer. 'Life is demanding to say the least, so this voucher meant the world to me,' she told us. During the pandemic Laura decided to wait and spend the voucher on a shopping trip with her daughter when shops reopened.
In October she went to spend the gift card and discovered it had expired. She asked Marks & Spencer whether they'd consider extending it but they said no. 'I explained how hard it's been for me to come into town over the last 18 months and that I felt the pandemic, as well as my personal circumstances, should be a valid reason to consider extending it,' she told us.
Marks & Spencer told Laura that M&S Foodhall was open and accepting gift cards during the pandemic. It also said she should have partially spent it on something which would have renewed the expiry date. 'I wasn't aware of any of this,' Laura said. 'I was too upset and we didn't have that special shopping trip.'
She reached out to them on Twitter but wasn't happy with their response. 'All replies have been around what I could and should have done differently. I've been made to feel foolish as I didn't want to spend a voucher intended as a treat for me on weekly food shops or school uniforms.' Marks & Spencer told us its gift cards carry a two-year expiry date from the last transaction - which can just be a balance check - so it can account for the spend.
Its customers service team will be contacting the customer about a gesture of goodwill.
'You don't expect to be charged an inactivity fee'
Alongside expiry dates, it's worth checking the small print for any sneaky fees. Some cards, such as One4all which can be used with multiple retailers, charge you a monthly inactivity fee of 90p after 18 months of owning the card. Jen Gillanders, Midlands, was shocked to find the balance on her One4all gift card, which she'd been waiting to spend during lockdown, was almost nearly gone due to the monthly charges she'd been incurring.
'It is stated on the back of the card that you'll be charged a fee after a certain amount of time, but the expiry date on the card was 2023,' she said. 'You don't expect to be charged for a gift card so you're not looking to find out information about it.' One4all agreed to re-credit Jen's card after she complained, but the fees have put her off buying their vouchers in future. 'I won't be recommending the gift card to other people,' she told us. Alongside inactivity fees, one in ten in our survey said they'd had to pay to register the card or were charged a transaction fee.
Before buying a voucher, or if you receive one this Christmas, it's worth reading the small print to make sure there aren't any surprising fees or charges. One4all told us a small monthly charge is incurred to cover the operational costs of processing gift cards which aren't covered if vouchers aren't spent. It says most regulated gift cards carry inactivity fees and that it's operating a 'no quibble' policy for the small minority of card holders affected by these charges due to Covid restrictions.
The Gift Card and Voucher Association told us gift cards are often the most convenient and safe option for shoppers looking to avoid disappointment this Christmas, while significantly cutting down on festive waste and unwanted gifts. To ensure people get the most out of their gift cards, whether buying or receiving them, it's published online advice to help people get the most out of their gift.
What are my rights with gift cards?
Here's what you need to look out for if you receive a gift voucher this Christmas.
- Always check the T&Cs on the voucher and the packaging around it, looking for information on expiry dates or fees (remember they can be nestled in the small print). With vouchers for experience days, find out whether you need to book and actually do the experience before the expiry date.
- Check how to extend your gift card, simply checking your balance online or spending a small amount on your voucher could renew the expiry date.
- Spend your voucher quickly if the retailer falls into administration.
Remember, the administrators can decide to stop honouring gift card credit at any point.
- Make a Section 75 claim if you buy someone a voucher for someone and the retailer goes bust, you may be able to put a claim in with your bank if you paid by credit card.
*Which? surveyed 2,000 adults in the UK between 15th and 19th October 2021.
Fieldwork was carried out online Opinium and data has been weighted to be representative of the UK population (aged 18+).
4 per cent of those surveyed said they had not spent money on a gift card, which equates to roughly 2 million of the UK population.