AmEx axes gift card fee

This post comes from Mark Huffman at partner site ConsumerAffairs.com.

 

One of the more aggravating aspects of gift cards are the fees that companies tack on. Take John of Lansdale, Pa. When his 10-year-old son tried to use the $50 gift card he'd forgotten he had, he found there was only $12 left on the card.

 

But not to worry. From now on, American Express says its monthly fee is a thing of the past.

 

The company said it is eliminating monthly fees on all of its gift cards, including those now in stores, those headed to market for the coming holidays, and those already purchased that are in consumers' wallets and purses. The change is effective immediately.

 

American Express sees this move as a transformational event because it says consumers don't have to worry about using the card quickly. The monthly $2 fee in the past meant that the gift card lost value every month until it was used up.

 

AmEx says it is the only major issuer of universal or "general purpose" gift cards to eliminate all fees after purchase, which consumers can only hope becomes a trend.

 

"Customers told us that monthly fees undermine the value of gift cards, plain and simple," said Alpesh Chokshi, president of Global Prepaid, American Express. "We believe this sets a new gold standard among gift cards and provides a win for consumers and our business. With today's announcement, recipients now have a gift card that's 100% gift, 0% fees."

 

Consumers have not only been telling American Express how much they despise the fees, they've filed more than 170 complaints with ConsumerAffairs.com about the fees and related problems.

 

American Express says its gift cards now have no fees after purchase -- no fees for activation, checking a balance, monthly servicing or for card replacement, and the funds on the cards never expire.

 

The fees aren't the only problems customers experience with the cards, however. Many of those who write to ConsumerAffairs.com say the cards are declined for obscure reasons.

 

"'NEVER, NEVER, NEVER, NEVER' are the words I am using to describe the American Gift Cards to my friends, acquaintances and anyone standing in line within the sound of my voice," wrote Saundra of Upper Marlboro, Md. "I have been embarrassed numerous times trying to use these cards. ... As long as I have a mouth to talk, I am telling everyone to leave the American Express Gift Cards alone -- they are not worth the hassle and embarrassment."

 

Saundra and others complain that their gift cards -- or, even worse, those they buy for friends and family -- are repeatedly declined even though they have adequate value remaining to cover the disputed purchase. Efforts to resolve the issue are often unsuccessful.

 

What brought on American Express' change in policy when it comes to fees? Perhaps the market made it necessary.

 

Gift card sales were weak during last year's holiday season as consumers, shocked by the sudden drop in the economy, chose discounted items as gifts, rather than spending on gift cards. Sales of gift cards are also expected to be weak this season, down as much as 6%, according to some retail forecasts.

 

Related reading at ConsumerAffairs.com:

• Bank fees hit record highs in 2009
• September job cuts fall to 18-month low
• Toyota recalls floor mats

Published Oct. 1, 2009