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Survey: Teens Like Gift Cards

Parents Should Point Out Hidden Fees and Charges

May 25, 2005
A survey by a company that manufactures gift cards find that teens like to get -- guess what? -- gift cards as birthday or graduation gifts. The survey doesn't mention all the hidden costs often associated with gift cards.

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A survey commissioned by Stored Value Systems (SVS) shows two-thirds of American teenagers have purchased one or more gift cards during the last 12 months, with the majority reporting year-round gift card purchasing, not just during the holidays.

According to the survey, teens appear to be generous: almost two-thirds of teens spend up to 20 percent of their disposable income on gifts. And they like gift cards. More than 80 percent saw the cards as a gift of first choice, not a fall-back item if nothing else could be found. The most popular average gift card values are between $10 and $24, and $25 to $49.

What the survey didn't show are all the strings that are attached to many gift cards

Hidden fees and dormancy charges are often attached to gift cards without the knowledge of the purchaser of the user. For example, some gift cards deduct $2 a month if the card is not used for six months.

"Gift cards have a cash equivalent, but when stores start charging unnecessary or hidden fees, it's as if gift cards are the gift that keeps on taking," said Illinois Attorney General Lisa Madigan, who last year helped draft and secure passage of legislation cracking down on gift cards in Illinois.

Simon Property Group Inc. - the nation’s largest shopping mall chain - recently settled a suit filed by New York Attorney General Eliot Spitzer. Simon had been issuing cards that would impose a $2.50 monthly "administrative fee" on all gift cards beginning in the seventh month after purchase.

In its survey, the gift card manufacturer found that birthdays are overwhelmingly cited as the most popular giving occasion for teens, which mirrors adult gift card purchasing behavior. However, while the second most popular occasion for adults is the winter holidays, teens cited anniversaries as the second most popular occasion to use gift cards.

"The study shows that, to teens, anniversaries are often relationship events such as one month of dating," said Evan Evans of the Center for Teen Insight. "These events merit gift giving and that represents a number of unique retailing opportunities.

Apparel and music retailers were the preferred retail categories where teens purchase gift cards (nearly 70 percent of purchases). Retailers selling electronics and books, restaurants, video rental chains and movie theatres were reported as the second most frequented places for teens to buy gift cards for friends and family.

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