First Toys R Us, Then Sears and Kmart

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First Toys R Us, Then Sears and Kmart

By Catherine Blinder

As our favorite stores are going out of business, some of us are left with unused gift cards – wondering what we should do!

The best thing to do is use them as quickly as you can!

However, consumers worried about what will happen to their Sears gift cards as the retailer goes through bankruptcy proceedings can breathe easy—at least for now. But don’t put off using them; you don’t want to lose that money – and that’s what gift cards are – real money.

The stores, including Kmart and Shop Your Way, are still around, but you’ll want to use your gift cards as soon as possible. According to Consumer Reports: 46 Sears and Kmart stores will close by November, and 142 more will close by the end of the year, and it is quite likely that the stores will then close for good.

Once the stores are closed, a bankruptcy court will decide whether or not the gift cards must be honored. It could take years for cardholders to get their money back, and in all likelihood, they will not ever be able to retrieve the money that was spent. (It’s possible that competitors may honor Sears gift cards, but you’ll have to keep looking at competitor ads to know.)

Beyond gift cards, it’s expected that the company will honor product warranties and its Shop Your Way loyalty program—at least for now. A customer letter states that Sears Mastercard and the Sears Credit Card will not be affected.

Not all store bankruptcies are the same. Toys R Us recently declared bankruptcy but accepted gift cards until their stores were closed. But retailers like The Limited stopped honoring gift cards as soon as it entered bankruptcy.

Gift cards are a popular gift, with Americans spending about $130 billion a year. And this year, it is projected by the National Retail Federation that $27 billion will be spent on gift cards during the holiday season.

Gift cards are a great last-minute gift, but experts say the items have become the gift that keeps on giving for cybercriminals. Consumer advocates warn that hackers have started using software that cycles through millions of gift card accounts until they find one with a balance.

“Where possible, you should register your gift card, and that way you establish ownership,” said Shelley Hunter, a consumer advocate who specializes in gift cards. “It really associates that gift card with you. And then if somebody else is trying to randomly pick up on your gift card numbers, it won’t matter because it’s already associated with you.”

So, use your gift cards from stores that may be closing quickly, and use caution when buying gift cards.

Here are a few tips to protect yourself from fraud:

  • Avoid buying cards from the front of the display which are easily accessible. Dig to the back where thieves are less likely to tamper with cards.
  • Once you buy a card, immediately change the security code or pin if that is an option.
  • Instead of buying cards from a third party, such as a grocery store, go online to the retailer and ship it directly.
  • Always save the receipt when you buy the card.
  • If you run into trouble with the card, go back to the retailer.
  • Check the packaging to make sure the card hasn’t been tampered with along the seams.
  • Make sure the ID number is hidden; if not, get another card.

As always, pass it on to help protect your family and friends!


This article was written by Catherine Blinder, chief education and outreach officer of the Department of Consumer Protection of the State of Connecticut. To learn more about how the Department of Consumer Protection can help, visit us online at

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October 24, 2018

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