Accounting For Gift Certificates

[Jacques Gastreaux]

I just this minute got a message from an employee at an upscale restaurant, saying that some customers were in last night who, at the end of the meal, presented a gift certificate which expired 1 1/2 years ago.  The gift certificate was not honored.  Then the gentleman angrily said that "six other restaurants have honored our expired gift certificates!" and proceeded to stiff the server.

For all of you restaurateurs out there, be advised that the value of expired gift certificates becomes property of the state. See Sec. 1 (13)(ii). Honoring an expired gift certificate could cause the restuaruant to have to pay twice.

edited to add:

Edited August 26, 2005 by Jacques Gastreaux

[Kanishka]

I just this minute got a message from an employee at an upscale restaurant, saying that some customers were in last night who, at the end of the meal, presented a gift certificate which expired 1 1/2 years ago. The gift certificate was not honored. Then the gentleman angrily said that "six other restaurants have honored our expired gift certificates!" and proceded to stiff the server.

It's one thing to stiff the server if they, I dunno, drop your gnocchi on your five year old. But stiffing the server because you couldn't use your expired gift certificate has to be the utter pinnacle of assholitude. People like that make me want to cry; if they publicly decry said restaurant in any forum they should have their taste buds seared off. Logical criticism is cool, but yeesh...

(for a better story about tipping, the latest Waiter Rant is golden)

Edited August 26, 2005 by Kanishka

[Barbara]

For all of you restaurateurs out there, be advised that the value of expired gift certificates becomes property of the state.  See Sec. 1 (13)(ii).  Honoring an expired gift certificate could cause the restuaruant to have to pay twice.

edited to add:

As always, our resident legal advisor has the most cogent comment. I have never understood the idea that a gift certificate has a time limit. I mean, afterall, somebody paid cash money upfront for a little piece of paper to give to someone else to use at his/her leisure. WTF?

I personally believe that any business (of whatever kind) needs to honor its gift certificates, as long as it is still in business. Otherwise, it just ripped off a well-meaning gift-giver who already paid.

[Mark Slater]

As always, our resident legal advisor has the most cogent comment.  I have never understood the idea that a gift certificate has a time limit.  I mean, afterall, somebody paid cash money upfront for a little piece of paper to give to someone else to use at his/her leisure.  WTF?

I personally believe that any business (of whatever kind) needs to honor its gift certificates, as long as it is still in business.   Otherwise, it just ripped off a well-meaning gift-giver who already paid.

Barbara,

Just curious, what business are you in? Do the books in your business stay open indefinitely?

Edited August 27, 2005 by Mark Slater

[Jacques Gastreaux]

As always, our resident legal advisor has the most cogent comment.  I have never understood the idea that a gift certificate has a time limit.  I mean, afterall, somebody paid cash money upfront for a little piece of paper to give to someone else to use at his/her leisure.  WTF?

I personally believe that any business (of whatever kind) needs to honor its gift certificates, as long as it is still in business.   Otherwise, it just ripped off a well-meaning gift-giver who already paid.

The point is, under the law, when a gift certificate expires, the money that was used to purchase the gift certificate must be paid to the state. If the holder of the expired gift certificate wants the value of the certificate, the holder's remedy is to file a claim with the state, not seek to have the restaurant honor the expired certificate. The restaurant does not get to keep the money. The restaurant is not "ripping" anyone off. In fact, under your position, it would be the gift certificate holder who would be ripping the restaurant off.

Edited August 27, 2005 by Jacques Gastreaux

[DonRocks]

The point is, under the law, when a gift certificate expires, the money that was used to purchase the gift certificate must be paid to the state.  If the holder of the expired gift certificate wants the value of the certificate, the holder's remedy is to file a claim with the state, not seek to have the restaurant honor the expired certificate.  The restaurant does not get to keep the money.  The restaurant is not "ripping" anyone off.  In fact, under your position, it would be the gift certificate holder who would be ripping the restaurant off.

need... coffee...

[Barbara]

The point is, under the law, when a gift certificate expires, the money that was used to purchase the gift certificate must be paid to the state.  If the holder of the expired gift certificate wants the value of the certificate, the holder's remedy is to file a claim with the state, not seek to have the restaurant honor the expired certificate.  The restaurant does not get to keep the money.  The restaurant is not "ripping" anyone off.  In fact, under your position, it would be the gift certificate holder who would be ripping the restaurant off.

I don't doubt that this is true. But, I wonder how many businesses are obeying this to the letter of the law. I mean we are talking about turning over money to a government and an awful lot of people (and businesses) try to get out of doing that as much as possible. Since I don't which restaurant issued the gift certificate, or how old it was, it is hard to say who is most at fault here. The customer was wrong in not making sure the certificate would be accepted before ordering. Then, stiffing the waiter is just unforgivable. On the other hand, some gift certificates have such short time limits that it borders on unfair. Which is one reason why I don't buy them.

Good Morning, Rocks.

Edited August 27, 2005 by Barbara

[deangold]

We use gift cards without an expiration date. Its pretty easy to track in the accounting process.

[Al Dente]

Many merchants use gift cards rather than paper certificates, and they make out like bandits on them.

While it's true that eventually the money gets handed over to the state at the time of expiration, many merchants will charge a "non-use" fee each month after a certain amount of time if the card is not used. This might only be a buck or two a month, but it really adds up as it virtually goes straight to the bottom line. I've read estimates that merchants can make 10-15% of the average value of all outstanding card balances free and clear.

[Barbara]

Many merchants use gift cards rather than paper certificates, and they make out like bandits on them.

While it's true that eventually the money gets handed over to the state at the time of expiration, many merchants will charge a "non-use" fee each month after a certain amount of time if the card is not used. This might only be a buck or two a month, but it really adds up as it virtually goes straight to the bottom line. I've read estimates that merchants can make 10-15% of the average value of all outstanding card balances free and clear.

Thanks, "Al." How very interesting. Another reason why I don't buy them. FYI, a few years ago somebody wanted to treat DH and me to a nice dinner in a favorite, local place. It was La Fourchette, for those who insist on all the info. They went to the place and either gave a check or had a credit card swiped, and insisted that we order whatever food and wine we wanted. Tax and tip were included. We had actually done something to merit such treatment and the staff there could not have been nicer, having been alerted to the situation. I think if you REALLY want to treat somebody to a meal, this is the way to go.

If I wanted to do this for somebody, I would go to Firefly and talk to John Wabeck and figure out how to do this. This wouldn't begin to compare with a gift certificate to Red Lobster.

[deangold]

many merchants will charge a "non-use" fee each month after a certain amount of time if the card is not used.

We don't. Guess I am missing oout on the opportunity to rip off my customers for giving me their hard earned money before they actually eat my food. Sheesh!

[Jacques Gastreaux]

Actually, the "non-use" fee sounds to me like a clever way of avoiding having the unused value of the card go to the state. If the recipient of the gift certificate does not use it, my guess is that the donor fo the certificate would be indifferent as to who ultimately gets the money. In fact, the original intent of the donor would be that the restaurant should get the money, after all, that is who they paid it to in the first place.