Exchanges to accept certificates issued by vendor that closed shop
SASEBO NAVAL BASE, Japan — The sudden shuttering of an Ohio-based gift certificate vendor could cost two military retailers up to $830,000, according to estimates by the Navy Exchange and the Army and Air Force Exchange Service.
NEX joined AAFES last week and agreed to redeem gift certificates sold by CertifiChecks Inc., the company that abruptly closed at the end of February, leaving shoppers throughout the military and across the United States out of millions of dollars.
The exchanges will have to cover the lost value of the certificates unless they can recoup the money from CertifiChecks, which said it plans to file for bankruptcy.
The Defense Commissary Agency, which has not said it would redeem the gift cards, on Friday announced that it is no longer advising customers to mail their certificates back to CertifiChecks. Instead, DeCA asks that they hold on to the cards until receiving further instruction.
The certificates were used by military exchanges around the world, military aid groups and hundreds of local chambers of commerce in the United States.
The company gave no explanation when it closed Feb. 26 and there was no indication Friday that it had followed through with a stated plan to file bankruptcy, AAFES spokesman Jeffrey C. Craven said in an e-mail to Stars and Stripes.
“AAFES is reviewing all legal options in regard to reimbursement,” he said.
CertifiChecks posted a statement on its Web site saying it plans to file for Chapter 7 bankruptcy in Dayton, Ohio. Its corporate telephone line leads to a recorded message with a mailing address for customers seeking a “potential” reimbursement.
Unlike other forms of bankruptcy, the Chapter 7 regulations usually do not include a plan to repay debts, though they do allow creditors to repossess some types of property, according to the Federal Judiciary’s U.S. Courts Web site.
AAFES said a total of $713,290 in gift certificates remain in circulation. NEX estimated the total higher, at $827,000.
The reason for the discrepancy was unclear Friday. AAFES said it was unaware of the NEX estimate, and NEX officials could not be immediately reached in the United States for comment.
CertifiChecks sold the gift cards online and held the money until they were used at military exchanges and commissaries. Military vendors redeemed the gift cards with CertifiChecks for cash.
At the end of December, 36,658 gift certificates for military exchanges had not yet been redeemed, according to Craven. Of those, 29,157 were sent to specific servicemembers and the remainder were sent to charities such as the Air Force Aid Society, Coalition to Salute America’s Heroes, Fisher House, Operation Homefront, American Red Cross, Soldier Family Assistance Center, USA Cares, USO and the Navy-Marine Corps Relief Society.
Both NEX and AAFES have removed links to CertifiChecks order forms from their Web sites and will continue to accept outstanding gift cards through May.
“Our goal is to help our customers. We don’t want them to suffer a financial loss during these difficult economic times,” NEX spokeswoman Kristine Sturkie said in a response to Stripes on Thursday.
The Defense Commissary Agency, which sold $3.9 million worth of the gift certificates in the 2008 fiscal year, said it will no longer accept them due to federal restrictions but is considering emergency measures to allow it.
Fisher House, which supplies housing for servicemembers during times of illness or hospitalization, received donated CertifiChecks gift cards that were given to families or used to buy items for its homes, James D. Weiskopf, group vice president, wrote to Stripes.
The charity said Friday it would know in about a week how many gift certificates remain in circulation.
“We have asked all Fisher House managers to use their existing inventory of exchange CertifiChecks within the next 90 days and to ask their guest families to do the same,” Weiskopf wrote.