John Goldberg and his sister purchased a $500 gift certificate from The Custom Shop for their nephew. But when their relative went to the clothier’s store location in San Francisco, he found the Custom Shop closed. And the company will not refund the cost of the gift certificate.
What can he do with a $500 gift certificate for a retailer that closed its only physical location near him?
Goldberg contacted The Custom Shop’s corporate office, the Better Business Bureau (BBB), and American Express (Amex), which he used to purchase the gift certificate. He believed California’s civil code addressing gift certificates required the retailer to refund the $500.
Gift certificates are a popular, convenient present to give. However, recipients don’t always find them convenient to use. In this case, the physical store closed down before the recipient could use his gift certificate. The company refused to refund the purchase price and pointed to alternative methods to redeem the gift certificate. This case is an important reminder that gift certificates aren’t always easy to use. See what recourse is available to Goldberg and his nephew.
The Custom Shop has a strict no-refund policy, even for gift certificates
The Custom Shop offers custom men’s dress shirts and other clothing via store locations listed on its website. The company also offers sales by phone, trunk shows, private appointment and online. Typically, tailors measure the customer to determine sizing requirements. Then the customer chooses from fabric samples and styling options for cuffs, the collar and so on.
Goldberg’s nephew visited the previously listed San Francisco store location at the Sheraton Palace Hotel on the corner of Market Street and New Montgomery, hoping to use the gift certificate in person.
“When he went there, he found the Custom Shop closed. The company then referred him to a local tailor,” explains Goldberg. “That was not the experience that we had purchased. He contacted the company and asked for a refund. They told him that they have a strict no refund policy.”
Custom Shop closed — now what?
A representative told him he could “order online.”
“An online order may be appropriate for someone experienced and measured, but not for someone going through the process the first time,” says Goldberg.
The retailer no longer offered service via the shop location, preventing the nephew from using the gift certificate in the way he had planned. But The Custom Shop stood by its no-refunds policy, pointing to alternative methods of purchase.
The Custom Shop also pointed out that their tailor had measured his nephew already, and thus should be able to order online or by phone easily. The San Francisco Custom Shop location now lists a master tailor with instructions to make an appointment for those who need to be measured.
Because the San Francisco shop closed, Dwayne Coward agreed to advocate for Goldberg, but Custom Shop stuck by its no-refunds policy and reiterated its offer of assistance to the nephew. In response to his email, The Custom Shop wrote:
We no longer have a physical store location in the area but do have a representative that can take care of his order needs. We also have a website available for him to choose the fabric and styling options. And we have offered a number of times to set up an appointment with a sales representative in the San Francisco area for Mr. Goldberg’s nephew, so he can look at the fabrics and styling options we have available. Mr. Goldberg’s nephew has his full set of measurements that our representative gave him, and the ordering process is very simple. Our CEO, Mike Smith, has even offered to assist him on the order via phone and our extensive styling options featured on our website that exceed what we offered in the store.
What does California Civil code say about refunding gift certificates?
Goldberg believed that the sale should be subject to California Code Section 1749.5. The California Department of Consumer Affairs website states that “Any gift certificate sold after January 1, 1997, is redeemable in cash for its cash value, or subject to replacement with a new gift certificate at no cost to the purchaser or holder.” However, the website also says, “California’s Legislative Counsel has concluded that a seller is not required to redeem a gift certificate in cash when requested by a consumer.”
The code appears to cover gift certificates that have expiration dates and were issued after Jan. 1, 1997, as well as certificates with expiration dates that were issued on or after Jan. 1, 1998. In the latter case, the company must have the expiration date prominently displayed on the certificate. Even if The Custom Shop gift certificate did not conform to the California Code requirements, the company would be permitted to provide a replacement card rather than a cash refund.
Coward concluded that this code section did not require The Custom Shop to refund the gift certificate balance in cash if it can provide the service. The Custom Shop maintained that it has a tailor who can assist Goldberg’s nephew, and its CEO has offered to help him place an order over the telephone.
Can American Express refund purchase of a gift certificate?
Goldberg used his American Express card for the purchase, so he wrote to Amex. He received an acknowledgment of his communication but has heard nothing since. He could have also used our American Express contacts to submit his inquiry.
Since Amex’s terms of service contain a disclaimer that all purchases made through Amex are subject to the seller’s terms and conditions, the credit card company would have been unlikely to have helped Goldberg.
The BBB couldn’t help, either
Goldberg also filed a BBB complaint against The Custom Shop in Toledo, Ohio, the location of the retailer’s headquarters. But this resulted only in The Custom Shop’s replying that its sales are nonrefundable.
“I contacted the Toledo BBB and filed a complaint,” Goldberg explains. “The Custom Shop is a BBB-accredited business and is contractually required to respond. BBB had to prod them and give them an extension to respond. The response was perfunctory at best. They never responded again, and the BBB said they were only required to respond once.”
The BBB complaint process is of limited value in resolving a customer service matter. In fact, last year our executive director, Michelle Couch-Friedman, wrote about the consumer value of the BBB.
The best option: use The Custom Shop gift certificate
Goldberg’s nephew can no longer visit a retail location for The Custom Shop in San Francisco. A refund is not an option. But he can still use the gift certificate. He has measurements from a previous visit, and there is a master tailor available who can take his measurements should he need to be remeasured. (Coward called to verify this.) It seems the company can also set up an appointment for him with a sales representative to view fabrics and styling options.
Since the company does make available an alternate means of obtaining custom measurements and placing an order, the nephew’s best option is to go ahead and use the service.
Have you ever dealt with a retailer closing a physical location before you redeemed a gift certificate?