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The case against restaurant gift cards

Posted by Mitch Lipka  May 7, 2012 10:00 AM

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Q. I have $100 in Piccadilly Pub gift cards. The chain abruptly shuttered their restaurants earlier this spring. My attempts at contact have met with no success. My latest attempt of an email to their posted email address was returned as undeliverable. Can you help? Or is there no hope?

Richard Morin, Hudson

A. Several readers have written in recently about problems with restaurant gift cards. The problem’s always the same: The restaurant – or the company issuing the gift cards – went out of business.

Such was the case with Dinegift, a restaurant gift card service that folded a couple of years ago, and still has consumers peeved. There was some talk about an investigation by the state attorney general, but nothing appears to have come of that.

Christopher Loh, a spokesman for Attorney General Martha Coakley, said “as a matter of policy we can neither confirm nor deny investigations.” He did say, though, that Piccadilly Pub had no complaints filed against it until this year, when 29 were lodged. The main issue: gift cards.

So, is there no hope? Not much. If the gift card was purchased with a credit card, you could file a dispute with your credit card company. Normally, you’ve got 60 days to file such disputes. Given that Piccadilly Pub shut down in February, you’d really be counting on luck.

So, let’s look at this as a cautionary tale. Gift cards and, even more so, discount vouchers like those sold by Groupon and Living Social, are built around infusing a business with cash. You’re paying them in advance with the expectation that they’ll be there when you’re ready to use your certificate or voucher. Piccadilly Pub spent your cash, but there’s no one there to cook or serve a meal.

Restaurants typically run on thin profit margins, so they’re opening and closing all the time. Paying anyone in advance for anything is a risk. In the case of the discounts, you’re taking the risk (some of the coupon sites will guarantee your investment) with the potential reward of extra buying power. The best strategy if you’ve been given a gift card or certificate is to use it right away.

This blog is not written or edited by Boston.com or the Boston Globe.
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About the author

Mitch Lipka is one of America's leading consumer journalists and advocates. He is an expert in product safety, recalls, scams, and helping consumers get out of jams. He is a nationally known consumer columnist and runs TheConsumerChronicle.com. He lives in Worcester. You can find him on Facebook or reach him at ConsumerNews@Aol.com

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