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Tweeter Refuses to Honor Gift Cards for Some Customers

Bankrupt retailer balks at redeeming purchases

By Lisa Wade McCormick
ConsumerAffairs.com

November 19, 2008
Remember Dr. Seuss' classic story "How The Grinch Stole Christmas?" It seems this year that bankrupt electronics retailer Tweeter is showing it has a heart three sizes too small where its customers are concerned.

ConsumerAffairs.com has learned that Tweeter is refusing to honor some customers' gift cards. That happened to Nancy B. of Summerfield, North Carolina, just a few days ago when she tried to use her gift cards at a Tweeter store.

The electronics chain, which suddenly closed all its stores on Tuesday, wouldn't accept Nancy's gift cards that totaled $450.

"We found a home theater system we wanted, and planned to pay the difference," she told us. "A young clerk helped us (but) was unable to get the computer to pull up our two gift card numbers. After repeated efforts, he called their 'service number' and was told in front of us that the cards did register with them, and were valued at a total of $450."

The manager, however, still refused to honor the cards.

"Instead of honoring them (we had full receipts for both, along with the top and bottom parts of the initially purchased gift cards), the manager told the clerk to tell us he didn't know what to (say) but 'sorry.' "

Even when Nancy pointed out that the company's Web site said Tweeter was still honoring gift cards, the manager wouldn't budge. "He became belligerent and said: 'The cards were old and they expired.'"

The manager then gave Nancy some paperwork to file a claim with the bankruptcy court — documents she considers worthless.

"I continued to argue that this is theft, stealing from us," she said. "We paid for these cards, they are not expired, and bankruptcy does not prohibit them from giving us merchandise with our cards."

Meanwhile, Tweeter has converted its bankruptcy to Chapter 7 liquidation and fired more than 600 employees at 70 stores across the country, according to The Boston Globe.

The paper also reported that customers are unable to pick up merchandise they had already purchased and approximately $14 million worth of goods are left in the now-closed stores.

The Attorneys General of several states, including Maryland, California, and Illinois, banded together to force Tweeter to honor its gift certificates after the company declared bankruptcy on November 15.

Consumer groups say this illustrates why shoppers need to be careful about which gift cards they buy this holiday season.

Some troubled retailers may not honor the cards — or only give consumers a fraction of the card's original value.

Texas authorities said one bankrupt company only honored one-quarter of the value on its gift cards. That meant customers who thought they had $100 to spend only had $25.

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