Expired Gift Certificate


SGF, Supreme Grumble Framer
Apr 26, 2002
De Pere, WI
(I told you I would be asking more questions)

Tonight was my official first night open. One sale, one looker. Got some work done and just poking through stuff.

Preface: Shop closes doors December 2005.
Previous owner passes away January 2006.
Shop is on the market until July 2006.

Went through phone messages left on the answering machine. One message was from a women who had a $200.00 gift certificate purchased from the previous owner. It expired in February. The shop officially closed for good just before Christmas 2005. I got the impression her initial call was before the certificate expired. The women asked if the gift certificate could be extended becouse she wanted to use it for her daughters graduation picture but her daughter was only a Junior at the time.

I understand buying a business the new owner assumes certain issues. But extending an expired gift certificate seems a bit much. For goodwill I thought about calling her and offering her $100 off or maybe 30-40% off a framing package. My gut feeling is if I ignore her she'll go away......for good.......and tell all her friends/ relatives.

Oh wise and wonderful Grumblers, I'm wide open for suggestions on this one.

Thanks in advance,

I think it could go either way and would talk directly with the customer about it - I would be prepared to honour it to maybe the full value or maybe part thereof depending on the customer, in my mind it is likely that someone willing to purchase such a certificate is obviously willing to spend a reasonable amount on such work and doing good by them could be a boon.

Explain the situation, tell them you need to consider your options and then call them back with your offer (or non-offer).

Whatever you decide in this instance be wary that there could well be more undeclared liabilities waiting to be presented.
Did the late owner keep any records regarding how many gift certificates might be out there and how many are unredeemed?

You could be a hero and honor this one - which could mean a lot, especially in a small town. My big fear is that there may be thousands of dollars of these things out there. It seems unlikely, but you never know.

Unless there are records.

(I guess Lance said the same thing, only upside-down.)
I had the same circumstances, I made sure to honor all outstanding GC that the original owner had sold, Most people didn`t expect that. So I kept my cutomers and they told others and so it goes. Remember 200.00$ GC= 100.00$ actual cost small price to keep a customer , Which are becoming fewer & fewer these days.
Best of luck
I think Lance has the right of it. Call the customer and explain the situation. Then, after deliberation - honor the gift cert. adkres is right. Word of mouth builds business and it's probably worth more than the $100 you'l throw at advertising.
in truth you're gonna' buy alot of good will(& you must prompt her to tell all her friends/church goers, etc about what a great/nice person you're turin out to be!!!!this is irreplacable pr!) I'd even go as far as getting this in the local rag for an 'atta boy' story about you're honoring all those outstanding GC's-dont tell them how many there are--not their biz(complete with picture of building, you 'doing' some framing, and the address/hours of same !!!!!!!!!!!!!!!!)
Although most of us do put expiration dates on gift certificates, in some states (PA being one of them), you cannot invalidate a gift certificate because of time limits. That's why the big boys are starting to charge service fees on gift cards when they're not used for six months. They chip away at them a few dollars a month until they're gone so they don't have a big liability out there.

So if you took over the previous owners business, you could still be liable depending on your state. If you started as a new business, you probably are not.

Having said all that, I would honor it and hope the good will would pay off. The bad will from not honoring it is something you probably don't need as a new business.
I would honor the whole $200.

From the consumer’s perspective, someone plunked down $200 hard cash for a piece of paper to be redeemed later. From their perspective, if you don’t honor it, you are trying to swindle him/her out of real money.

It wasn’t her fault that the store was closed, (nor was it yours), but if you don’t honor the certificate, you’ve got a heap of really bad publicity on your hands.

When you buy a business, not only are you receiving the assets but you must accept the liabilities as well.

If you play your cards right, you can come out of this as a benevolent hero.
When I bought my shop, I bought everything that came with it. Even the problems. If you don't honor it, it might cost you much more than materials.
If you honor it (I do), you've kept a customer, and probably gained more in all her friends. Consider it an advertising expense!
Honor it in full, cheerfully and with no hesitation.

Am I the only one who finds gift certificates with expiration dates insulting?

edie the donttellmewhentospendmymoney goddess
I agree with Bill and the Godess.

Putting an expiration date on a gc IS insulting. The money paid for it isn't losing potency in the bank account why should the gc which is supposed to be like cash.

I wouldn't go back to a store that told me a gift for 100.00 I got for christmas is now only worth 75.00.

I have gotten a few customers from other shops around here that do that.

Honor it and gain a loyal customer and good word of mouth.

BTW... best of luck in the new store.
I would honor it in a heartbeat. With what is spent on advertising that sometimes does not prove fruitful - this person could spread the good word about you and your "new" shop.

I don't think gift certificates that people purchase with cold hard cash should have expiration dates on them; but the ones I give as donations, do - to help promote business and traffic.

Yep honor it.
Remember it's not going to cost YOU $200.
Perhaps you can upsell a little over the 200 to help pay for supplies.
I would honour the expired gift certificate since it should promote good will for your business. A happy customer is most likely a repeat customer...

Previously posted by Roz:

I don't think gift certificates that people purchase with cold hard cash should have expiration dates on them; but the ones I give as donations, do - to help promote business and traffic.
I agree with Roz for putting expiry dates on gift certificates that I give as donations. I usually specify an expiry date 6 months to 1 year from date of the event that I've donated to. I would have to admit though, that I would still honour one of my donated gift certificates even if it is past the expiry date. I just think an expiry date in this case might give the potential new customer that extra little push to use the gift certificate sooner rather than later.
Well, so be it, I'll honor it. But am I wrong thinking the previous owner realized the profit of the sale of the gift certificate? So I may infact lose money?
You'll lose a lot more money if you DON'T honor it!
But am I wrong thinking the previous owner realized the profit of the sale of the gift certificate? So I may infact lose money?
You raise two separate issues:

(1) Theoretically the previous owner should have recorded the transaction as a customer deposit rather than a sale per se. (And therefore in my book there should be no expiration date). Also theoretically the customer deposits should have been disclosed and accounted for in escrow when the business changed hands. Most likely proper disclosure and consequent accounting did not occur. Therefore you are where you are.

(2) If you consider that irrespective of whether or not proper accounting occured in escrow you effectively acquired the customer deposit as part of the purchase price of the business then you have already received the value of the GC; therefore your profitability on this transaction is undamaged. Conversely if you did not honor the GC your aggregate profit would theoretically be higher than it otherwise would be. But like I say, that's the theory. In practice just be glad that the GC brought a customer through your door and be magnanimous as others have already opined.