If My Gift Cards Don't Expire, Why Are They Expiring?

Dennis Tucker's gift card balance keeps shrinking. A closer look reveals the source of the leak. But can it be stopped?

Question: I have a question about the balances on my American Express cards. The first one was a $70 rebate card from McAfee. I used the card for a couple of purchases and was carrying a balance of $18.

The back of the card clearly says -- in very small print -- "A $2 monthly fee will be assessed against card starting 5 months after card issuance. Funds do not expire."

OK, this one was probably my fault, though it seems rather contradictory that a fee will be assessed but "funds do not expire."

The second card, a $25 gift card from Nuance, clearly says, "Funds do not expire." It says nothing about fees being assessed at any time, only, "Additional limitations apply. See Cardholder Agreement."

I think the fee of two dollars per month is exorbitant and unnecessary. This was money refunded to me by the vendors (McAfee and Nuance). Without their promise of a rebate, I would not have made the original purchases.

I've enclosed my statements. You'll see that every month, both cards deduct a $2 "maintenance" fee.

I would like to request that American Express refund the $43 in fees and take steps to stop this unfair-to-consumers practice in the future. -- Dennis Tucker, Stockton, Calif.

Answer: You're right, the "maintenance fee" is just another way to make your funds expire without them actually expiring. These dormancy fees, which are charged to your account as a penalty for inactivity, are banned by some states and limited by other states to $2 per month.

A quick note about your role in all of this. I looked at your balance, and it shows the drip-drip-drip of $2 being withdrawn at regular intervals. If you'd read your monthly statement, you might have seen it earlier. It's OK -- I can't think of anything more boring to read than your own card statement. But still, read it more often, please.

Let's take a step back from this nonsense. Businesses want to take your cash and give you nothing in return, and they would do if it were legal. (I guess that's unfettered capitalism taken to an extreme, but I'm not going there today.)

Gift cards are particularly nefarious. The company takes your cash and gives you a piece of plastic that functions as an IOU. Then it takes your money and invests it, profiting from the float. It can expire your funds or slowly bleed your credit dry with dormancy fees. The only beneficiaries, other than the companies, are hackers who use these financial instruments to engage in an evil practice called manufactured spending. Look it up. It's evil, trust me.

Interestingly, California law limits gift card fees to $1 month, and only for gift cards with balances at or below $5 if the gift card is reloadable and has not been used for 24 months. In other words, since you are a California resident, these dormancy fees are illegal.

On this case, our intrepid research team jumped into action. We found an executive contact at American Express, to whom you sent your complaint. The company sent you a replacement gift card for the full amount. They even sent it to you special delivery. That's a nice touch.

Christopher Elliott specializes in solving intractable consumer problems. Contact him with your questions on his advocacy website. You can also follow him on Twitter, Facebook and Google or sign up for his newsletter.