Troubles mount for gift-certificate holders
March 11, 2009
SASEBO NAVAL BASE, Japan — Consumers might recoup only "pennies on the dollar" for gift certificates sold by a defunct Ohio company, the state’s attorney general said this week.
That could mean the loss of hundreds of thousands of dollars for military retailers who are still redeeming the certificates.
Ohio Attorney General Richard Cordray filed a lawsuit Monday against CertifiChecks Inc., saying the company broke the state’s sales laws by failing to honor the certificates and misrepresenting reimbursements offered to customers after it closed.
CertifiChecks left tens of thousands of shoppers in the global military community and across the United States with worthless gift certificates when it suddenly went out of business Feb. 26. It posted a notice on its Web site saying it planned to file for bankruptcy in Ohio and asking customers to mail unused gift certificates for "potential" reimbursement.
CertifiChecks defaulted on $713,290 worth of gift certificates sold to military exchange shoppers. The Navy Exchange and the Army and Air Force Exchange Service said last week they will cover the loss and are continuing to accept the certificates.
AAFES said recently it is keeping its legal options open. Agency officials in the United States were not immediately available for comment Tuesday.
Commissary shoppers bought $3.9 million worth of the certificates in 2008. The Defense Commissary Agency, which runs the stores, said it didn’t know the total amount of gift certificates still in circulation but it would redeem them at a loss.
Any reimbursement claims for that lost money will be handled by a bankruptcy court — if CertifiChecks follows through on its stated plan to file an action, Cordray said in a release Monday.
"The bankruptcy court will determine the amount of reimbursement each consumer is entitled to receive," he said. "Depending on the resources available, this may be only pennies on the dollar for individual consumers."
Cordray asked the court to order CertifiChecks responsible for reimbursing consumers and to rule that the company violated the law. The attorney general also asked that the company be fined at least $25,000, according to the release.