Are Service-based GC's Going the Way of the Dodo Bird??!?
January 4th, 2008 • Posted by Larry Donahue • Permalink
The Dodo Bird almost exclusively, epitomizes extinction as undoubtedly, unquestionably and irretrievably dead. The Dodo extinction occurred during recorded human history, and is undeniably attributed to human activity.
Are we bearing witness to something equally without doubt, unquestionable and irretrievable, as our politicians blindly and ignorantly rampage a very important and crucial form of revenue for small and medium sized businesses within their respective jurisdictions? Are service-based gift certificates "dead as the Dodo??!?"
As I mentioned last month, many states have changed their laws pertaining to gift certificate expiration dates (See Changes in GC laws for some states …). More will follow. This article, understandably, is causing consternation among some SpaBoom clients in the affected states. One area that seems to be on everyone's mind, is the difference between dollar-based and service-based gift certificates.
Every client I've talked to is of the belief that service-based gift certificates are no longer a viable option when they are not allowed to expire the gift certificates they sell. The problem is, service-based gift certificates are important to your business, because (1) many gift certificate purchasers do not wish to have the amount displayed on their gift, and (2) gift certificate purchasers, on average, will spend more buying a service-based gift certificate than a dollar-based certificate.
The biggest concern I've heard, regarding selling service-based gift certificates without an expiration date, is the fear of having to offer a service five or more years from now, when the price may substantially change. In other words, having to provide a $200 massage when presented with a gift certificate that was purchase 10 years ago for $75.
I'm here to tell you that this isn't a problem. The key is in your terms of sale, when selling your gift certificates. Here's the magic language to use:
Our spa reserves the right to convert service-based gift certificates to their cash value, equivalent to what was paid for the gift certificate, at our option and sole discretion.
If that's too open-ended for you, consider placing a time-frame on it or the circumstances for which might trigger the conversion. Here's a suggested clause that includes both:
For gift certificates older than one year, our spa reserves the right to convert service-based gift certificates to their cash value, equivalent to what was paid for the gift certificate, if the service indicated is no longer available or the original price for that service has changed.
This language works with all the GC laws I'm aware of, because the laws are trying to protect the value of the gift certificate. Value being money, and as long as you protect that value by converting the gift certificate to a dollar-based certificate, you'll be able to protect yourself while keeping compliant with your state's laws.
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January 7th, 2008 at 9:30 am
Thank you for this article. It is nice to have a solution, within the law, to protect us from the outcome mentioned.
January 7th, 2008 at 10:07 am
Is any of this language on the current SpaBoom Gift Certificates? If not, can it be incorporated?
Debbie Hirsch
January 7th, 2008 at 10:09 am
Debbie, we've had some language like this since the beginning, but I've since modified the language, and asked our development team to incorporate. It should be in place shortly.
January 15th, 2008 at 4:25 pm
I did quit using SpaBoom for anything except a cash amount for the reason that I can't expire it here in California, so I sell my own gift certificates online along with SpaBoom that have an expiration date for the service, not for the dollar amount. We give the clients 4 months to use the gift certificates for the packages purchased, after that, the gift certificate is good for whatever dollar amount was paid for it. I'd much rather have everything go through SpaBoom and save me from having to create a gift certificate here in the spa for each package purchased.
January 15th, 2008 at 4:40 pm
Hi, Sandra.
You have two options with SpaBoom. The first option is to use it for service-based gift certificates, just as you do for dollar-based gift certificates. The default terms of service gives you the ability to switch a service-based gift certificate to a dollar-based gift certificate, at your option.
The only problem with that first option, is your right to do this isn't spelled out on the instant gift certificate itself. It's buried in the online terms of service. So, if that's not good enough for you, as in your want it spelled out very clearly on the actual gift certificate yourself, the second option may be of interest to you.
The second option is to upload your own custom gift certificate designs to SpaBoom. We support this without extra cost to you. That means you can have your own gift certificate designs, and you can place your own legal language on the face of the gift certificate, to address your concerns for service-based gift certificates.
If you're interested in this second option, go to the Setup Tab within SpaBoom, then click on "GC Designs" on the left. The "help" on the bottom-left has detailed instructions about this. Of course, you can always contact us directly for support or assistance.