Your Gift Card May Come With Strings Attached

Bryan Keogh reports in the Wall Street Journal (subscription required) about major retailers changing how they account for revenue from gift cards and certificates.

Many firms are wrestling with how to account for so-called gift-card "breakage," industry jargon for cards and certificates that go unredeemed for years, piling up millions of dollars on a company's books. It's a delicate issue, in part because the unspent money is considered unclaimed property. Home Depot began declaring gift-card funds that go unspent for four years as revenue in early 2005, pocketing $43 million in extra income for the first quarter. Best Buy did the same later that year, but said it would only wait two years before claiming the unspent gift-card money as revenue.

The article has a nice table that shows how gift card policies vary widely among major retailers.