A regional(?) retailer, Bradlees, has announced that they are going out of business. A brief news story on the radio was that Bradlees had announced that they were NOT going to honor outstanding gift certificates. They then bowed to pressure from the Massachusetts Attorney General and then agreed to honor their outstanding gift certificates.
The company is not going bankrupt, they are merely ceasing to do business. Did I correctly understand the news story, or is there more to this? Under what circumstances can a business NOT honor its gift certificates (other than bankruptcy)? Isn’t a gift certificate a contractual obligation?
I’m pretty sure that this would be a civil matter, which means they won’t be arrested but could be sued.
Business’ ruotinely pull this kind of thing.
Peace,
mangeorge
Failing to honor a gift certificate might amount to consumer fraud, which is prosecutable as a crime in many states.
Gift certificates are probably a form of commercial paper regulated by the UCC, although I don’t for the life of me know which title would apply. Failure to honor one would create a civil liability which could be presented as a debt when the business winds up its affairs as part of dissolution.
I do know that it is illegal to issue gift certificates with expiration dates in the state of California.
I was in a shop the other day… Some athletic shoe store… and saw a sign that said they apologized to all of their dedicated customers, and would now be accepting expired gift certificates, as it was illegal to cause them to expire in the first place.
Sounds like they got off easy. How many people with expired certificates would bother going to check in the store to even read the sign. I would guess that the store made a tidy profit on those “expired” gift certificates.