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). She writes “To Her Credit,” a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.
Dear To Her Credit,
I just read one of your replies to a question you received in 2008. The person asked you what happens if she files bankruptcy and goes on a spending spree beforehand because her sister did it and got away with it.
I don’t disagree with your answer. However, in your opening paragraph you make a statement by addressing the ethics of what she was contemplating. The ethics of this idea is certainly questionable. However, what about the ethics of the same situation when the retailer files bankruptcy? For example, bankrupt retailers do not have to honor the gift cards they sell. I know because I was a victimized by such a situation.
Most of us out there are sick and tired of people like you making excuses about the morality and ethics of how we play the system, but failing to defend the public when banks and retailers feel no remorse whatsoever when they give the customer the proverbial shaft. When the banks got funding to help homeowners modify their loans, did they look at the morality and ethics behind using the money for that purpose? I don’t think so. So next time you want to give a sermon about ethics and morality, please speak about both sides of the fence. — Deanne
You won’t find me defending businesses that give customers the shaft! Hey, I’ve even been the one left holding the worthless gift card, or in one case, several hundred dollars left on a prepaid fitness plan card. I know how maddening that can be!
In the case of the fitness plan, the parent company continues to advertise and operate in other states after peeling off the operations in my state and informing me that, despite the name on everything I ever saw, my contract was with a separate entity.
I have nothing against companies that try and can’t make a go of it and slide slowly into bankruptcy. They don’t have much of a say in what happens after the bankruptcy trustees take control. If you bought gift cards from the bookstore when their troubles were all over the news, and you didn’t redeem the cards when they sent out e-mails reminding you, it’s sad but can’t be helped. At least the cutoff date was no secret.
What’s underhanded is when businesses keep selling prepaid memberships and gift cards right up until hours before the end. I don’t know how they can look a customer in the eye and sell him a gift card he knows will be worthless, but it happens. The salesperson may be preoccupied with the fact that she’s about to be laid off and figures your worthless card is your problem. Or maybe she is as surprised as you when the lights go out. In the case of the fitness plan, I was actually lucky. Other people were signing up and prepaying up to thousands of dollars — up to the day before the company padlocked the front door and disappeared.
The difference between a bookstore going under in a public fashion and the fitness center hiding its difficulties and selling worthless prepaid plans to unsuspecting customers is comparable to the difference between an honest hard-luck debtor and the happy shopper who got her last few flings in before hitting the bankruptcy attorney’s office.
In the end, we can moralize all we want about both people and sleazy businesses who take the money or the goodies and run, but it won’t accomplish much. And it’s not always a clear cut case one way or another. It’s a good thing it’s not our job to judge them all.
What we can do is try to protect our own interests in the future. A few precautions will help:
Let’s get over the gift card craze. Sure, it’s easy to stick a gift card in a card. But if you really want to give your nephew $50 for graduation, what’s the matter with cash? The exception might be something like a Starbucks card as a gift to another adult, when giving cash would be awkward. But most often it’s better to buy a real gift, give cash or just offer to buy lunch.
Be very cautious about paying too far ahead for anything. When you buy a service in advance, you’re in effect making a loan to the business. You haven’t so much as seen their financial statements or anything akin to a credit score. Why should you trust your money to them? And don’t think because they have ads on TV they must be doing great. That doesn’t mean a thing.
If a business owes you money, for example, if you’ve returned something or overpaid, make sure you get a cash refund or use your credit immediately. I almost lost a $500 credit when an art school changed hands. It took a lot of talking to convince them that they still owed me a course!
I hope you didn’t lose too much with the worthless gift cards. From now on, remember this: The less you owe other people and they owe you, the fewer things can go wrong. Keep your financial life simple, and try not to stress too much over things neither you nor I have any control over.
Best of luck!
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