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jamyskis: I think the problem is less that these gift cards are not being honoured and more that the management knew full well that they were entering administration and still sold them anyway. This is less a matter of the company's obligations while they are under administration and more a matter of fraud committed by the management.

I suspect this will yet be brought before a court under criminal law.
Yep, it's a matter of intent.

If they accepted money with the intention of honoring the obligations that came with it, but ended up not being able to, it's an honest error.

If they accepted money knowing full well that they couldn't deliver in return, that's a con.

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gooberking: Gift cards make some (emotional) consumer sense. They at least let you give someone something along the lines of what they want, and it feels somewhat more personal than just handing someone a wad of cash. It says "I know something about you," instead of "I know nothing about you" or "I didn't want to put effort into this."
You can always give them the money and write in the card 'To buy yourself the latest comics' or 'to help pay for that new laptop you need' or whatnot.

Problem solved.

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gooberking: Beyond that they financially only benefit the store. Available funds can shrink, the customer is forced to either overspend, or underspend to get what they want, and the store wins in both instances. There are no discounts or rewards for using giftcards. It's horrifically unattractive financially for the consumer, and very attractive for the store.
You can be mitigate this by figuring out how the amount matches with price points at the store modulo-wise.

If I got someone a GOG gift card for instance (if it existed), a 30$ gift card would make a lot of sense, but a 35$ gift card wouldn't.

Some arithmetics are involved.

It does help when taxes are included in a rounded price (unfortunately, they rarely are).

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F1ach: I was in Gamestop this evening and they are offering a 10% discount on all new games to people with a HMV voucher, as they cannot scan the voucher to see what it's worth, its obviously a gimmick, but if you have a 30€ voucher at least you will get about €5.50 off a new game, its better than a smack in the gob I guess.
It shows some solidarity.

It's a cool thing to do.
Post edited January 18, 2013 by Magnitus
Definately not trustworthy, and even if HMV persists on the high street, I kinda doubt customer trust in them will.

I'd say it's less nice what happened with some banks, at least here. The staff knowing the bank was in dire straits, not easily seen from the public, and still advised people to invest in stocks in the bank claiming it'd be a fairly safe investment. And then once the bank went down, so did all the money people had put in the stocks. There was a rather large outcry about that considering the staff knew it wasn't safe, and people go to their bank for trustworthy advice on investments.

We've seen way too many cases of less than proper conduct over the last few years.
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jamyskis: I think the problem is less that these gift cards are not being honoured and more that the management knew full well that they were entering administration and still sold them anyway. This is less a matter of the company's obligations while they are under administration and more a matter of fraud committed by the management.

I suspect this will yet be brought before a court under criminal law.
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Magnitus: Yep, it's a matter of intent.

If they accepted money with the intention of honoring the obligations that came with it, but ended up not being able to, it's an honest error.

If they accepted money knowing full well that they couldn't deliver in return, that's a con.
Depends whether the customers had access to all the relevant facts. If they were selling them without disclosing how close they were to bankruptcy, that could be regarded as fraud, even if there weren't any other wrong doing. Obviously, we're talking UK law, so who knows. But, it's questionable at best to sell gift certificates knowing you might be closing your doors in a matter of weeks.
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anjohl: Going into bankruptcy changes nothing.
This made me lol. By definition, it actually changes a lot. That's the whole reason bankruptcy/liquidation/administration exists.
Not the first time this has happened... and you can bet it won't be the last. Kind of sucks for those who it affects though... that's why I always gift items or cash.
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anjohl: Going into bankruptcy changes nothing.
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htown1980: This made me lol. By definition, it actually changes a lot. That's the whole reason bankruptcy/liquidation/administration exists.
I know it matters in fact, I was pointing out that the paradigm should not change. A company should be required to bear the responsiblity of shady dealings since it has an asymmetrical informational advantage. Unless a company makes all inter-company communication public, gift cards should have to be honored above all other creditors.

A gift card holder is not a creditor, they are a customer that has bought merchandise in a deferred sale.
The thing is, if the law in Ireland isn't completely different in that case than the German laws it would actually be illegal for HMV to accept these cards and it would be with good reason.

A gift card is a dept they have with you like any other dept they have is too and bankruptcy means that they are in a situation where it is not expected, that they will ever be able to pay their debts completely back.

They are then put under administration, and have to pay the profit they make now to the administration manager who then will go on and then distribute the money to everyone they are in dept with after certain rules.

If they would accept your gift card then they would ignore the administration they are in now and favor certain dept holders even if they aren't allowed to.

Of course giving out gift cards even if they knew how it would end is insanely crappy.

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anjohl: A gift card holder is not a creditor, they are a customer that has bought merchandise in a deferred sale.
In the definition of the law (at least if it isn't completely different in Ireland) a gift card holder is a creditor. When you buy a gift card you basically give the store an interest free credit. If you would consider the gift card a merchandise this would mean the store has never any obligation to give you anything worth the money of your gift card in any circumstance.
Post edited January 18, 2013 by Darkcloud
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htown1980: This made me lol. By definition, it actually changes a lot. That's the whole reason bankruptcy/liquidation/administration exists.
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anjohl: I know it matters in fact, I was pointing out that the paradigm should not change. A company should be required to bear the responsiblity of shady dealings since it has an asymmetrical informational advantage. Unless a company makes all inter-company communication public, gift cards should have to be honored above all other creditors.

A gift card holder is not a creditor, they are a customer that has bought merchandise in a deferred sale.
But that is the entire point of bankruptcy law. The whole purpose is to change the paradigm. Subject to certain matters, the intent behind the law is for the company/individual to be able to start afresh without having to pay out any creditors (be they someone who has purchased a gift card, or someone who has supplied product on credit) or with only having to pay those creditors a percentage of the debt owed.

In many jurisdictions the directors of the company may be personally liable if, at the time the transaction occurred, the company was unable to pay its debts as and when they fell due, but that is a different issue altogether.

In many jurisdictions employees are given priority over other creditors and there is certainly good reason for that.

Why is it that you feel an individual who has purchased a $50 gift card should be given priority over an individual who has supplied $20,000 worth of merchandise without being paid and may now herself be forced into bankruptcy as a result? Both parties have an "asymmetrical informational disadvantage" do they not?
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F1ach: We were talking about this yesterday, the most sickening thing for me, was that they knew they were going under before christmas and checked with their legal team as to their liability for gift cards, they were told they wouldnt have to honour them and they still let people buy them at xmas.
Do you have a source for this? I can find reports that they issued a statement that they may not be able to keep trading, but nothing to say that they explicitly checked the legality of not honoring gift cards.
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F1ach: We were talking about this yesterday, the most sickening thing for me, was that they knew they were going under before christmas and checked with their legal team as to their liability for gift cards, they were told they wouldnt have to honour them and they still let people buy them at xmas.
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wpegg: Do you have a source for this? I can find reports that they issued a statement that they may not be able to keep trading, but nothing to say that they explicitly checked the legality of not honoring gift cards.
It's in the original link I made

http://www.eurogamer.net/articles/2013-01-16-angry-grandfather-walks-out-of-hmv-with-3-games-after-staff-refuse-to-accept-gift-voucher?utm_source=eurogamer&utm_medium=email&utm_campaign=net-daily

Specifically :

Finance director Ian Kenyonn said the company was confident of its legal position, having checked with lawyers back in December
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Magnitus: Yep, it's a matter of intent.

If they accepted money with the intention of honoring the obligations that came with it, but ended up not being able to, it's an honest error.

If they accepted money knowing full well that they couldn't deliver in return, that's a con.
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hedwards: Depends whether the customers had access to all the relevant facts. If they were selling them without disclosing how close they were to bankruptcy, that could be regarded as fraud, even if there weren't any other wrong doing. Obviously, we're talking UK law, so who knows. But, it's questionable at best to sell gift certificates knowing you might be closing your doors in a matter of weeks.
I find it very unlikely that their execs wouldn't have foreseen the current situation at least a few months in advance with 95%+ confidence.

Proving it without access to their paperwork is another matter entirely though.

My guess: They'll probably get away with it.
Post edited January 19, 2013 by Magnitus
Again, assymetrical access to information. Companies selling gift cards should be required to fully disclose their financial health at all times if the law is going to treat them as interest free loans.
Post edited January 19, 2013 by anjohl
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anjohl: Again, assymetrical access to information.
Is there really anyone who couldn't tell that a company with expensive retail stores selling overpriced CDs, DVDs and headphones wasn't likely to be around for long?
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anjohl: Again, assymetrical access to information. Companies selling gift cards should be required to fully disclose their financial health at all times if the law is going to treat them as interest free loans.
I'll ask the question again because I would really like to know your answer:

Why is it that you feel an individual who has purchased a $50 gift card should be given priority over an individual who has supplied $20,000 worth of merchandise without being paid and may now herself be forced into bankruptcy as a result? Both parties have an "asymmetrical informational disadvantage" do they not?

Both are effectively treated as interest free loans.
Because the consumer is at the lowest level on the totem pole, and is hurt the most. A gift card is in fact not a loan, it is adeferred sale. The money was spent, the customer should be entitled to a refund or valued appropriately.

A supplier owed $20,000 has a lot.more info on a partners financial health than a consumer.