Present imperfect

8 December 2004

It's the second week of December and the joys of the season are now giving way to the panics of the season. You hardly know your co- worker; what could she possibly need? The couple down the street seems to have everything. And your great-uncle always scowls when he unwraps his present.

These are the tribulations that have driven the rise of one of the uglier sides of gift giving: the gift card. Deloitte & Touche figures that this year 64 percent of us will buy gift cards, up from 2003's 60 percent, making them the No. 1 gift this holiday season (clothing is now in second place).

Why? Because gift cards are convenient. They require little effort, little thought - and not even much in the way of wrapping. That's well and good. Still, if it's the thought that counts, and gift cards require such little thought, then don't these "gifts" really count for nothing? I think so.

It's easy to understand how it all began. You knew a family that might like a portrait, so you purchased a gift certificate from a photography studio. Or perhaps you had a favorite restaurant that you'd love a relative to try. A certificate for dinner made sense.

About 10 years ago, though, when retailers latched on to the idea of plastic cards rather than beautifully done-up paper certificates, things began to change. Retailers and eventually financial institutions figured out that the plastic gift cards were little different from credit cards. Rather than a certificate for a specific item, gift cards could be used for anything in the store, or perhaps anything in the mall or even - when imprinted with Visa or MasterCard - anything anywhere.

Consumers love them. Gift cards are easy to buy and easy to carry. They save everyone a lot of time. You don't need to pore through shelves of merchandise; your recipient doesn't need to stand in line to return it because it's the wrong color.

Retailers and financial institutions love them too. Consumers buy gift cards upfront, giving the business free use of that cash for weeks or even months. Gift cards boost sales, luring people into stores and enticing them to spend more. Even better, many are never used; Deloitte found that consumers hold an average of 2.3 cards unused from a year ago. Not a bad business - you give me money; I give you nothing.

Even worse, the newest gift cards, issued by financial institutions, have fees and administrative costs that reduce their value over time. Attorneys general in some states, including Massachusetts, argue that state laws governing gift certificates should also apply to gift cards. However, financial institutions are governed by federal law, meaning that the rules that apply to credit cards (which allow fees) also likely apply to them.

Yet the real problem with gift cards is that they undermine the whole reason we give gifts. In theory, gift giving is supposed to be a personal and tangible sign of the affection or esteem we have for someone else. But giving a gift card is little different from giving cash. If that strikes you as inappropriate, gauche or antiseptic, then so too is a gift card.

So what to do instead? Two things to consider.

First, trim your Christmas list. If you have no idea what a person wants, then probably you don't really need to give that person a gift.

Second, if you really are just stymied for ideas, contribute to a charity on your recipient's behalf. If a child in a friend's family had a bout with cancer, make a gift to the Jimmy Fund in their name. If a co-worker worries about panhandlers, donate to the Pine Street Inn. But gift cards? Bah humbug.