Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006).
Dear To Her Credit,
I bought a prepaid card of 20 suntan sessions two years
ago with my Visa card for $200. They gave me some special lotion as a bonus for
signing up.
I don't get around to going very often, and I've only used about
five sessions. (They never give me a receipt or anything when I go in.) Now I've
got a letter from them saying the suntan booth has been sold and they will no
longer honor any prepaid sessions.
Can they do that? I thought a business had to honor the
prepaid goods and services of the business it bought. The only thing that
changed is the name on the door -- it's still a suntan booth. They didn't even
change the décor, and the same teenage girls work there.
Will Visa help me when my payment was from two years ago?
-- Heather
Dear Heather,
Simple logic tells us that when a business changes hands, it
should assume prepaid cards sold by its predecessor. This is especially true in
a business that encourages or requires prepayment, such as tanning booths.
Otherwise, they could sell as many prepaid cards as they can, conveniently
change owners, and start all over again.
People probably wouldn't be lining up to prepay the next
time, however. The question isn't so much can businesses do that, but why would
they want to? Is there a worse way to enter the tanning salon market than to
make all the current tanners in town mad?
Most business owners follow both logic and good business
sense and honor prepaid cards. Sometimes, however, you run into someone who doesn't.
The first thing I would do is talk to the manager or send a letter. I had to do
that once when an art school changed hands and told me my prepaid class credit
was no good. I asked her if the same would be true if I had owed them money -- would my debt have
disappeared when the school changed hands? She said no ... and she let me use my
credit to take another class. Pressing the issue is sometimes all you need to
do.
The law in this type of case depends on your state. Consumer
law attorney and author of the California Debt Blog Jonathon
G. Stein says about prepaid cards, "The business usually needs to honor
them. However, this is state specific. Some states do not require a purchaser
for value to honor prepaid sessions. Most do."
If you talk to the manager and still don't get your sessions,
Stein recommends filing a complaint with the state licensing agency or calling
the franchisor.
You should also dispute the bill with Visa. Even though it
has been two years, according to Stein, "Visa will investigate and
probably refund her the money." Most credit card contracts give you a very
short window of time, such as 60 days, to report erroneous charges on your
bill. However, you have more time to complain about goods and services that are
not satisfactory, or as in your case, that you never received.
To avoid this problem or at least make resolution easier
next time, insist on a receipt when you use a prepaid card at any business. Try
not to prepay more than you'll use in a reasonable amount of time -- not only
because of the danger of the place going out of business, but because it's too
easy to pay for things we never get around to using.
You're lucky the business was sold instead of closed down.
You should be able to get your money's worth. In my area, a large weight loss
franchise recently sold package deals for thousands of dollars, right up until
the day before they put padlocks on the door. Think of the people who paid
$2,000 or more and came back for their first weigh-ins to find the offices all dark!
Always be skeptical of paying too far in advance, and keep
good records. Remember, the size of the business or how much they advertise on
TV is no guarantee of how long they will be around.
Sally Herigstad answers questions about credit every week for CreditCards.com. Herigstad is a certified public accountant, author and speaker. She also writes regularly for MSN Money, Interest.com, Bankrate.com and RedPlum.com, and has been a guest on Martha Stewart radio and other programs. You can read more about personal finance and download free budgeting worksheets at her website: www.sallyherigstad.com
To Her Credit answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to Sally.
Published: March 13, 2009
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