HAMBURG, N.Y. (WKBW-TV) — The number of business bankruptcies continues to grow with well-known names 'Tuesday Morning' and 'Hertz' joining the list. Many companies have been financially wounded by the COVID-19 pandemic.
Unfortunately, when it comes to people with gift cards, gift certificates, or credits for a business in bankruptcy, it can be a losing effort to try and collect by filing a claim in federal bankruptcy court. "You are an unsecured creditor, and therefore, you will be absolutely last in line to get paid," explained 7 Eyewitness News Legal Analyst Florina Altshiler.
The Better Business Bureau of Upstate NY has some simple advice for people with unused gift cards. "A lot of the stores that are filing right now are still open. So use them, use them, use them! If they are taking them, use them," said BBB Communications Director Melanie McGovern.
BBB provided the following tips about gift card use in bankruptcy situations:
- Before buying a gift card, look into the retailer’s financial condition: If news articles report that a company is on shaky ground, it might be best to purchase a gift card from another retailer.
- Check the terms and conditions. A gift card’s terms may allow the card to be used at another business location.
- Purchase gift cards with a credit card, if possible: Your credit card company may be able to help recover money lost if a business goes under. Some retailers, however, require gift cards to be purchased with cash.
- Use gift cards as quickly as possible: While you may have years – or forever – to use the gift card, that doesn’t mean you should wait that long to spend it.
The travel industry is nervously watching the long-term impact of Covid-19. Hertz Rental Car sent shock waves when it announced that it was filing for bankruptcy protection. "They are still renting vehicles. They'll even take coupons and use travel credits you may have if you had to postpone a trip,'' explained AAA of Western & Central NY spokesperson Elizabeth Carey.
Many eyes are also watching the cruise companies - especially after Norwegian Cruise Line announced in Mid-May that it was considering filing for bankruptcy. 'Cruisers' often store-up points and credits from their trips for future cruises. While Norwegian Cruise Line has since rectified its financial situation by securing over $2 billion in funding, the question still remains as to what would happen to those cruise credits in a bankruptcy situation?
It turns out that the 'United States Tour Operators Association' has created a one million dollar travelers assistance program to make sure travelers don't lose payments or deposits in the case of bankruptcy, insolvency, or a sudden shut down. You can read more about the association's program here.
"Any big name travel vendor, like Norwegian or Hertz, would belong to this travel association. So, if a business was to go under, there would be some consumer protection," added Elizabeth Carey from the AAA.