Consumer Alert: 'Tis the season to avoid gift cards!
Consumers want cards for the holidays, but businesses will win in the end
Gift cards will be as popular as ever during the holidays. A recent survey by Fiserv says that 60 percent of consumers will buy cards to compensate for product unavailability created by supply chain disruptions.
But a closer look at the data suggests consumers may be handing businesses free money instead.
Two-thirds of consumers want physical gift cards this year — as in, the kind you can lose. In 2021, over half wanted plastic cards, presumably because of the pandemic.
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Companies love giving physical gift cards because they know customers lose them. And when they do, the business gets to keep the money.
But there's one more reason you should avoid gift cards — and no, it's not because gift cards are one of the preferred tools of scammers. It's because gift cards are, to put it bluntly, bad for customers.
Why? Ask Robert Kraus, a business owner who has previously offered gift cards to his customers. "It's a dirty little profitable secret," he told me.
He says businesses are supposed to record the value of card sales as a liability. But in reality, most business owners he knows simply pocket the sales without recording them as a liability.
"If and when the gift cards are used, they apply the value as a promotional discount — a fully deductible expense," he says. "Of course, applying the card this way reduces the sales tax liability as well — for the business, at least."
In other words, card sales are considered nearly 100 percent profit, plus they provide a nice deduction if they are used.
And that's a big "if."
"In one of the businesses I was associated with, that use was about 20 percent," says Kraus. "Yes, 80 percent of the gift cards sold were never used."
He says that unless you want to support a local business with a donation, never buy a gift card.
As someone who has lost hundreds of dollars of gift cards — usually just after the holidays — I think that's sound advice.
The takeaway: Avoid gift cards this holiday season. If you must buy a card, go for something like Amazon or Starbucks, which can be tracked electronically and that almost everyone uses. But you're really better off avoiding gift cards entirely.
Consumers are worried about holiday air travel — and how!
A new survey says consumers are worried about holiday air travel. Like, really worried.
The poll, conducted by World Nomads before this week's strike authorization by Delta and United pilots, suggests the trauma of flying this summer has kindled fears of being stranded at the airport.
The most stressful thing about flying, the survey found, was flight delays and cancellations (43 percent), with 28 percent saying it’s long lines and 26 percent saying it's getting stuck in heavy traffic on the way to the airport.
Air travelers also expressed fears of sitting next to a troublesome passenger. The worst seatmate:
“Drunken Dan” topped the list (42 percent)
“Snoring Steve” (23 percent)
“Loud Larry” (21 percent)
“Shoeless Samantha” (14 percent)
The majority of those polled (76 percent) claim to be early birds when it comes to arriving at the airport, compared with 24 percent who arrive for a flight at the last minute. If airline pilots go on strike during the holidays, it will hardly matter.
The takeaway: There's almost nothing you can do to avoid a difficult seatmate on a full flight. But maybe don't be like the 24 percent who arrive at the last minute. Better yet, don't fly at all during the holidays if you can avoid it.
These are the best countries for international drivers
Europe has the best roads for international drivers, according to a new survey from Zutobi. But can you guess which ones?
The answer: Spain, Slovenia and Portugal — in that order.
Spain ranks highest because of its low level of congestion, relatively cheap rental cars and safe roads (3.9 traffic deaths per 100,000 people).
Slovenia ranks highly because of its abundance of parking, while Portugal comes in third palace because of its high-quality roads. It's number 10 on the list, with a score of 5.69. High fuel prices and dangerous roads (12.7 deaths per 100,000) dragged its scores lower.
The takeaway: If you like to drive, try a road trip across the Iberian peninsula this spring. And perhaps a detour to Slovenia, if you have extra time.
The last word on those frequent liars
My story about frequent liars in travel and Lufthansa's fake AirTag ban drew a lot of responses.
One reader on Linkedin took the headline literally and insisted that she always told the truth. I'm sure she's right most of the time. Others claimed the ban was real. It wasn't, but the Air New Zealand one, which I detailed in the Linkedin update, might be.
Lying — whether it's done by travel businesses or travelers — has a corrosive effect on the overall travel experience. As I suggested in the article, it lessens the experience by lowering trust and adding to the stress of the experience. Of course, people aren't lying all the time, but they are doing it enough to make it a problem.
By the way, I'm still taking suggestions for my new "Fact Check" feature that will launch soon. Reply to this email with your ideas, please.
Your thoughts, please
I'd love your thoughts on gift cards, travel worries and frequent liars. The comments are open.