Got a question about a closed down business

[DamnRena]

Recently a friend of mine closed their business down. I guess business was not as good as they thought. Well since they have closed, people who bought gift cards has been going to another branch of the business, same name different owners and asking where they can use the gift cards. Shoulod they get refunds? or it was their fault for not using the gift cards 5-6 months earlier? What should she do?

 

[LaBella]

I think they should be able to use them at other locations

 

[DamnRena]

Originally posted by: LaBella
I think they should be able to use them at other locations

well the thing about that is both the business were owned by different owners, and there is not even affiliated with each other.

 

[Safeway]

She should issue refunds, then. She saw the profit with zero loss.

 

[Zolty]

Edit for updates:
Business is closed, and the businesses aren't affilaited then they should not be able to use the gift cards. Your friend should be able to keep the money seen from the gift cards as long as he/she gave some notice of the closing. IE: We are closing for good in two weeks.

 

[DaveSimmons]

Legally, I'm no lawyer and it probably varies from state to state. She might be liable for paying cash for the cards if she's no longer offering the services, unless her company declared bankruptcy.

Ethically, I'd say your friend should try to negotiate with the other business to have them cover the cards after she makes some kind of payment. The other company benefits from the new customers so the payment doesn't need to be anywhere near 100%.

 

[amdhunter]

Originally posted by: Safeway
She should issue refunds, then. She saw the profit with zero loss.

 

[dullard]

A small handfull of states help protect the consumer in the case of a bankruptcy where the business still operates. I don't think any state helps the consumer when the business closes.

Basically a gift card or gift certificate is an unsecured 0% loan to the company. When the company goes under, you get scraps at best. Gift cards and gift certificates suck for that very reason. I avoid them like the plague.

What should your friend legally do? Nothing. The customers took their risk and the gamble failed. End of story. What should she morally do? Maybe, if she has a conscience, she may offer them some of her unsold goods.

 

[sactoking]

Are these two businesses franchises? Like, she owns a Subway and the other person owns a Subway? In that case the Franchisor reimburses the Franchisee for the gift card expense.

Or, is it two mom-and-pop/independently owned shops that just happen to sell the same product and have the same name? In that case if I were the remaining business owner it would be a cost-benefit analysis between taking the cards and incurring a loss vs gaining a long-term customer.