Give Your Business the Gift of Reduced Risk: Prohibit Purchasing of Gift Cards

Gift card to employee

During the winter holidays, many companies (perhaps yours as well) have practiced the habit of giving gifts to their clients and customers to thank them for their purchases and loyalty over the years. Lately, those gifts might be looking less like boxes of candy or food baskets and instead, are taking on the form of gift cards. “Why not?” you might ask. “Gift cards are convenient. They’re safe. Everyone loves them and uses them — right? It’s the perfect gift!”

Not so fast. First of all, by allowing gift cards to be purchased using Commercial Credit Cards or other types of business accounts, you are opening up your company’s purchasing program to enormous risk.

Secondly, gift cards might not be all that you think they are. So before we review the risks involved and what can be done to reduce them, let’s first review a little about gift cards and how they’ve become so popular…and if they even should be.

A Brief History of Gift Cards

The concept behind gift cards isn’t all that new. Paper “gift certificates” served a similar purpose in the decades before their existence. But as this nation turned the corner into the 21st century, the paper certificate turned into a hard plastic card that mimicked both the look (and the assumed convenience) of a credit card, and with that, its popularity grew. Why?

Frankly, gift cards offer a bit of an “out” on the part of the giver. A gift of cash might be interpreted as cold, heartless, and without much thought. While not very different from cash, gift cards, on the other hand, give the impression that at least a little “thought” went into the giving, as the vendor and the products it could offer the recipient were considered in its purchase. In either case, the advantage to the receiver that he or she could pick out a gift truly appreciated remains. But in the choice of the gift card, the giver is also sending the message “I care”—even if only a little.

Design has played a role in the success of gift cards as well. Gift cards often act as both cash gift and greeting card in one. In most cases, they come complete with colorful scenes appropriate for the specific event or holiday. In some cases, they have the ability to emit sounds and music. In a few extreme cases, they even employ a higher technology, like a camera (courtesy of Target) or an audio speaker (from Best Buy).

The Far-from-Perfect Gift

The truth is, gift cards are far from the perfect gift. A gift card survey by Bankrate Credit Cards reports that half of U.S. adults have gift cards that went unused in 2020. Cards often get misplaced and forgotten. Balances after an initial purchase can be left unused. And there’s nothing that guarantees that your client is going to be that excited about the products from the vendor you’ve chosen — nor that breaking away to make the purchase is convenient for them. The purchase is left for later… and then, it never occurs.

Oh, yes — about those purchases “left for later” and so often forgotten: While not true of all gift cards and not as quickly as they did in the past thanks to federal and state laws, some do expire. After five years, according to federal law, it’s legal (although some state laws might extend the expiration date). So a card, found in a drawer years later may or may not work, depending on how much time has elapsed and the laws in your state. You might be able to reactivate it with a fee that, again, might or might not be worth the expense or the bother.

Also, there’s virtually nothing that protects the loss of a card. So in that way, a card is very much like cash. If a store goes out of business, more often than not, so goes the value on any gift cards tied to it.

So Much for “Convenience”

The taunted “pro” of gift cards has always been “convenience.” But as you can see from all that was already listed, gift cards are hardly that. They really don’t offer more advantages than cash—except for the illusion that the giver put some thought into the purchase.

So whether or not gift cards should even be purchased for clients is clearly up for debate. However, far more detrimental to your business spending accounts than the “right gift” for a client is the golden opportunity for your users to turn gift card purchases that should have been intended for customers into gift card purchases for your employees, their friends and their family.

If it’s the thought that counts, then give some serious thought to the danger you can be introducing into your card program by allowing purchases of gift cards—and what you can do instead.

Remove the Temptation

Imagine yourself as the employee who can purchase gift cards. Maybe he or she is having a tight year, and his or her budget for holiday gifts for friends and family has been greatly reduced. Yet, sitting right in his or her hand is a little Commercial Card that has the option to buy, of all things, gift cards.

Yes, those gift cards are meant for clients and customers. Yes, you’ve even spelled that fact out in your policies and trained your employees as such.

But you haven’t really removed the risk, because you haven’t removed the temptation.

When you have the purchase of gift cards as an option, you have so little control over how those cards are used in the end. So, instead of trying to work around the risky business of purchasing gift cards, just prohibit the purchase of them altogether. You’ll still need to put that restriction into your policies and procedures, but the outright prohibition will give you more power when such improper behavior occurs, and will be more likely to stop potential purchases before they are even conceived.

Get the Word Out

Once you’ve adapted a “No Purchasing of Gift Cards” stance, communicate it. Start first by placing it in your written policies and procedures, and then continue through training. Using Card Integrity’s “TRAINING-WISE” solution, educate your users immediately on the new policy and the consequences that will occur should someone violate it. You can create two training programs: one that re-trains current users to ensure that they know and understand the new additional policy and another that trains new users on all the policies and procedures that are in place, including newly added prohibition.

If Not Gift Cards, Then What?

If you’ve given gift cards to your clients and customers over the last decade or longer, you might be at a loss for what to do in their place. But with a little creativity, you can come up with alternative gifts that can reduce the risk of misuse and fraud.

To reduce risk when managing the purchase of gifts for clients, keep choices to a minimum, make sure employees keep receipts of purchases, and create a record of what gifts were sent and to whom, so that all information can be reconciled.

One way to do this is to establish good working relationships with vendors who could supply gifts to give to your clients. You can tie P-Cards to those vendors or create accounts (such as ghost accounts) that can only be used for the purchasing of certain items. You can even have the purchases sent directly from the vendor to the client (rather than those coming back to your employee). Due to their nature, these accounts and relationships will, by default, create a so-called “paper trail” (usually not on paper anymore) of information that will reveal who made the purchase, what purchase was made, and where the purchase was sent.

Then, using the Card Integrity solution “RECEIPT-WISE,” you can keep tabs on that information and ensure that a purchase (whether it’s a gift for a client or something for your business) is always purchased and used appropriately.


Other Gift Ideas

Here are some ideas for gifts for your business clients:

  • Food never fails, as we all have to eat. There are a lot of choices, from fruit to nuts to candy and popcorn. One idea is to tie the food to the region that either your company is from or the client’s company is in, to make it more special. For example, if your client works in Chicago, they might appreciate a can of caramel and cheese popcorn from the city’s iconic Garrett Popcorn Shops.
  • Again, an activity in which we all (hopefully!) participate. This gift can be personalized depending on the gender of your customer contact. Examples of appreciated gifts would be shaving products for men and skin care products for women.
  • If you know your contact loves a certain team, anything with that team’s logo on it would probably go far in making your client happy. Tickets to an event might go even farther.
  • Office items. Being that you all do business together, an item directly for the customer’s office is an easy choice. Fancy business card holders and high-quality pens could add a bit of pizzazz to one’s business environment and stand as a constant reminder of your generosity and thoughtfulness.

In giving gift cards to your clients and customers, you might receive in return misappropriate usage and fraud. Is that the gift you want to receive? Remove the temptation by prohibiting gift card purchases, getting the message out to users, and then following up with reviews and audits, all with help from Card Integrity. For more information on how we can make your purchasing program more successful, call us at 630-501-1507 or click here to contact us today via our website.

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