Retailer rejects gift cards

What happens when retailer rejects the gift cards? Facing bankruptcy, Sharper Image says it can’t honor its own gift cards. We all got gift cards during holiday seasons from our family and friends. We also send some to them. But more and more retailers are filing for bankruptcy because they are going out of business, it is leading to more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year.

The Sharper Image has announced that it is suspending the acceptance of gift cards, at least temporarily. It urged shoppers to check the company Web site later this month for an update. That is typical of businesses that reorganize under Chapter 11 bankruptcy, which treats gift cards as a loan to the company, not as cash.

Sharper Image’s rival, Merrimack, N.H.-based Brookstone Inc., is capitalizing on the situation. It announced last week that it would exchange Sharper Image gift cards for 25 percent off any purchase, no matter the amount of the gift card or the cost of the item.