Home Depot Reforms Gift Card Policy

Attorney General Spitzer today announced an agreement with the nation’s leading home improvement retailer to protect consumers who purchase gift cards.

Home Depot USA, Inc. has agreed to implement a new nationwide policy governing the use of store-issued gift cards. The company will deactivate and replace cards that have been lost or stolen provided that consumers can provide proof of purchase.

"Although these gift cards resemble credit cards, they do not have the same legal protections against loss or fraud," Spitzer said. "This agreement will reform practices at Home Depot and set an example for other retailers."

Spitzer’s office began an investigation after a Long Island consumer reported that Home Depot refused to help her when one of her gift cards was lost. The woman was remodeling her kitchen and as part of a store promotion had been encouraged by Home Depot staff to purchase a series of gift cards worth $15,000 in total.

After making a few purchases using the cards, the consumer noticed that one was missing. When she reported the problem, Home Depot officials, in accordance with the company’s then-existing policy, initially declined to assist her and falsely denied having the ability to track and cancel gift cards.

The consumer persisted, however, and the company finally cancelled the card. At that point, however, Home Depot refused to issue a replacement card, in effect requiring her to forfeit the $1,900 face value of the lost card. The company later reversed itself and refunded the money to the consumer.

Gift cards - the modern version of gift certificates - resemble credit cards and are issued by many retailers in varying amounts. In Home Depot’s case, individual gift cards can be purchased in denominations up to $2,500. In the year 2001, Home Depot sold approximately 645,000 gift cards in New York State worth more than $33 million.

Consumers spent an estimated $32 billion on gift cards from various retailers and banks across the nation in 2001.

Spitzer noted that many consumers are under the misconception that gift cards enjoy the same legal protection as credit cards and debit cards. Although federal law limits the liability of credit/debit card holders who properly report fraudulent activity, no such protection exists for gift cards.

Under the agreement, Home Depot will deactivate and reissue gift cards for those customers who can provide reasonable evidence -- generally a sales receipt plus either a credit card or a cancelled check -- that they were the purchaser of the lost, stolen or damaged gift card. Purchasers who do not have an original receipt can obtain a "transaction register" from their credit card issuer.

Home Depot also will print statements on the back of each gift card in both English and Spanish reflecting its change in policy to permit the cancellation and replacement of lost, stolen or damaged gift cards in appropriate circumstances. Home Depot also agreed to pay $45,000 to cover the costs of the Attorney General’s investigation.

Individuals with questions or complaints about gift card policies are encouraged to contact the Attorney General’s consumer help line at (800) 771-7755.

This case was handled by Assistant Attorneys General Stephen Mindell and Herbert Israel of the Consumer Frauds and Protection Bureau.