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Savvy shoppers find bargains in discounted gift cards; retailers trying to make their cards more appealing

This year, retailers' gift cards record messages, light up or smell like gingerbread. Some feature the work of noted photographers, others incorporate personal photos. Some can be sent via text message or Facebook posts, and others are tactile (like the one with little holes for a finger puppet).

Now, if only the recipients wanted them.

While 62 percent of people surveyed by Consumer Reports said they planned to buy gift cards this year, only 13 percent said gift cards were their most-wanted gift. They make for a strangely specific generic present: I have $25, but I can spend it only at Jiffy Lube?

A flock of companies is trying to make gift cards more useful and take a piece of their value by offering to buy, sell and trade them.

Meanwhile, retailers are devising new ways to make the cards more appealing, because gift cards increase shopping traffic and encourage higher spending once people visit to redeem them. The cards also essentially act as an interest-free loan, where the retailer takes money now and does not have to give anything in return for a while.

Home Depot is selling a card that, when held up to a computer's Web camera, suggests products. A Walmart card, when scratched, smells like gingerbread, while Barneys New York has limited-edition cards featuring photographs by Nobuyoshi Araki. An American Eagle Outfitters gift card can be sent as a text message, Amazon.com's can be sent as Facebook posts, and a company called Wildcard lets people send a variety of gift cards to recipients' phones through its app. As for that finger-puppet card, it is a bear, and your fingers poke out as its arms -- courtesy of Target.

But however entertaining they look, gift cards still seem to fall into the I-just-gave-up category of presents.

"Ended up getting Holly a gift card. Had no other ideas :(" one person wrote on Twitter. "Jacqueline needed to get a gift card for the boring members of my family," a second reported. "Christmas shopping today was nothing but fail. We're getting close to gift card territory, folks," a third posted.

Consumer groups also warn against gift cards. Regulations that went into effect in August made cards much better for shoppers, the groups say: they limit fees the issuers can deduct from the gift card after inactivity, and require at least five years before the gift card expires. Still, retailers can go bankrupt, rendering the card invalid; they can limit the locations or types of purchases it applies to; and they can decline to refund it if it is lost.

"You do have a little more protection from fees," said Gail Hillebrand, senior lawyer for Consumers Union. But, she said, many people still forget about gift cards, meaning consumers spend money that does not buy anything. In the survey, conducted in October, 27 percent of people still had not redeemed gift cards from the year before. Last year, consumers lost about $5 billion in gift card value to fees or expirations, according to the research firm TowerGroup.


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