There's some bad news for customers who buy gift cards from Costco
Costco usually sells reliable products, but sometimes, unexpected things happen. In recent news, several gift cards sold at the retailer’s outlets were rendered obsolete after the issuing company filed for bankruptcy. Gift cards are a promise of goods and services, but if the company issuing them fails to stay afloat, it is the customers who are left with a useless card they might have paid a lot of money for.
As per a report in Fox News, the gift cards were issued by a company called Synergy World. Recently, the gift and loyalty cards brand filed for Chapter 7 bankruptcy protection and abruptly shut shop. The report did not state whether those who had availed of its gift cards were informed of the decision. However, it left several Americans with defunct Synergy restaurant gift cards filled with significant balances.
Customers were left with no immediate recourse and had to speak to either Costco or the participating restaurants about the matter. However, neither of them could take responsibility for managing these cards. The report states that some Costco outlets issued refunds for the gift cards, but all this did was create even more confusion, as not all outlets were in sync. The total money blocked in these unredeemed cards will be known when bankruptcy filings are made public.
According to Bankrate analyst Ted Rossman, those affected by these cards going obsolete will have to get in line. "When the company behind that promise fails, gift card holders are typically unsecured creditors and end up near the back of the line," he explained. The report also claimed that in 2024, 43% of Americans hold unused gift cards, with an average balance of more than $240.
While it is not a good feeling to see a gift card getting declined, it’s even worse when that happens to credit cards. That is exactly what the likes of Walmart and Target can now do on purpose. Earlier reports suggest that after a settlement was reached between Visa, Mastercard, and several US merchants, the retailers involved will be able to decide on certain surcharges for credit card usage and will even reserve the right to reject specific cards.
According to the existing rules at the time, if a retailer accepts one kind of credit card, like a Visa or a Mastercard, they have to accept every single card by that particular network. This was not acceptable to most retailers. Networks often offered reward cards to customers, and the retailers ended up paying higher fees to the credit card companies to accept them. This didn't strike businesses as fair, since retailers always wanted more control over what cards to accept, an idea that these big credit card companies were not fans of.
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