Monday, March 3, 2008

Bankruptcy abuse defrauds gift card holders

Homer Simpson calls the bankruptcy law the "cool law." But while Bush made it much harder for working-class Americans to file for bankruptcy when they need it, corporations and white-collar criminals go unscathed. Once in a while you'll hear of some CEO ruining their business and abusing the bankruptcy laws by absconding with all the money to Florida where the right-wing laws protect them.

Now retail giants are abusing the bankruptcy laws to make gift cards worthless. After declaring bankruptcy, retailers are decreeing that gift cards for their stores will not be accepted. So if you got a gift card, you can't even use it. The card is now worth no more than the plastic it's printed on.

All across America, over $75,000,000 in gift cards may be made worthless by this abuse this year. That's because retailers are allowed to treat gift cards as a loan to the company.

This is an outright scam. Somebody actually paid to buy the card. The company already got the money from it. So the company is, in effect, detaining merchandise that rightly belongs to the card's bearer.

In my day, this would have been called fraud. But in BushAmerica, they call it business.

Those who defend retailers for this swindle are the same types who accuse hard-working individuals who seek help for their financial woes of being "deadbeats." They claim that when a corporation declares bankruptcy, it's "reorganizing", but when a person does it, it's being a "deadbeat."

We need laws to crack down on retailers pulling this scam. We also need to restore the old personal bankruptcy law - which Congress has a mandate to do, but still hasn't done. With Congress's inaction, the states need to shore up this loss by reinstating the old law themselves. If Florida can protect white-collar scofflaws, the other states can protect the working class.


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