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What to Know Before Buying a Gift Card

Gift cards are incredibly popular. They are also easy to buy and make great stocking stuffers and last minute presents.

According to a 2017 National Retail Federation poll, “For the eleventh year in a row, gift cards remain the most popular items on wish lists, requested by 61 percent of those surveyed.” Yet, many people have no idea the fine print of gift-card contracts may hide a provision that takes away the recipient’s right to go to court if he or she uses the card and then has a dispute with the retailer.

Many gift cards include “forced arbitration” clauses in their contractual language. Even though the recipient doesn’t agree to the original contract between the purchaser of the card and the retailer, she may become bound by the arbitration clause when she uses the card to make a purchase.

Forced arbitration clauses have become ubiquitous in ”take-it-or-leave-it” contracts covering such varied subjects as credit card and bank accounts, student loans, cell phones, employment, and even nursing home admissions. These clauses deprive people of their day in court when they are harmed by violations of the law. If you’re bound by an arbitration clause, you can’t take your claim to a neutral court and an unbiased judge and jury. Instead, you have to present it to corporate-designated arbitrators. Some arbitration clauses even make you jump through incredible hoops to have your dispute considered. For example, the ride sharing service Lyft says you have to arbitrate your dispute in California no matter where you live. Arbitrators are not bound by rules of evidence, their hearings and decisions aren’t open to the public, and there’s little right to appeal if they ignore the facts or law. And most arbitration agreements prevent people from bringing claims jointly or as part of a class.

Before you buy that special person in your life a gift card, here are some ways to protect them:

  • Go to terms and conditions section on the company’s website and search for “arbitration.” If the terms include a provision that forces the recipient of the gift card into arbitration, consider buying a gift card from a retailer that won’t take away the gift card recipient’s rights to go to court.
  • Some gift card contracts allow you to reject an arbitration provision within a certain number of days after you receive the gift card. If the gift card’s terms and conditions include such a provision, be sure to tell the recipient of the gift card that they have a limited amount of time before they waive their rights.
  • Cash is a great stocking stuffer! And you won’t have to worry about the special people in your life giving up their rights.

Note: Public Citizen did not perform an exhaustive search for arbitration clauses in gift cards. Not all gift cards include forced arbitration provisions in their contracts. The companies identified by Public Citizen were chosen based on their high name recognition as a national brand.