Retail and Consumer Products Advisory: Selling and Honoring Gift Cards in Bankruptcy

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These trying economic times have had an impact on almost every facet of consumer behavior, including gift card sales. The gift card market is significant: just one year ago, some sources estimated that gift card sales could grow to reach $100 billion in 2008 as compared with $80 billion in 2006.1 But actual spending on gift cards has fallen dramatically: a November estimate lowered projected gift card sales in 2008 to around $60 billion.2

Consumers may fear that gift cards will not be honored if the retailer in question files for bankruptcy or faces other financial challenges. Directors and officers of retail companies may worry about liability if the entity is not able to honor the cards it sells. These concerns highlight the need for retailers to understand the mechanics of selling and honoring gift cards in a difficult economy.

Please see full advisory for more information.

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