Montana Businesses MUST Honor Gift Cards? Well, No, They Don’t.
Today, on the Billings Customer Service Watchdog Facebook Page, another flurry of drama has whipped up... this time about Gift Cards not being honored by the new owners of The Rustic Salon and Spa here in Billings. At first glance, we could be quick to blame the salon... however, when you dive in and find out more... this story is a bit deeper than it seems.
Change Of Ownership (Again)
According to the State of Montana business records "The Rustic Salon & Spa PLLP" was just recently registered as a business in Montana. Now, considering that the business has been around for longer than a few months, this clearly shows (legally) this is a NEW business, just in the same location... using the same name that people have come to know.
You, too, can look up any business using the following link, if you need to in the future.
So, knowing that... I not only reached out to the current owner of The Rustic but also to the Montana Office of Consumer Protection... and here's what I got.
First, The Rustic Ownership Response
After reaching out to The Rustic via email, I got some clarification... and a bit of confusion. Here's what I asked, with the responses from The Rustic. (Note: All responses are direct copy/paste responses from our emails. Errors are not caused by us at Townsquare Media)
- Who are the new owners? Have they owned other businesses in Billings?
- This was not addressed. They simply said "The places has changed owners 2 times we r the 3rd owner we set up card terms in the contract he would pay us back! On that note he not have an agreement when he buy it!"
- When purchasing The Rustic, did you opt to not buy out existing gift cards? Or did the former owners agree, contractually, to honor those gift cards?
- "We would honor the cards but the first owner style was cards that can’t be tracked in 1 month we lost 16,673 dollars out staff is commission based and on top they tip with cards we don’t know how much is on them. We gave everyone a 90 day warning for white gift cards we still honor the brown ones"
- Have you considered honoring a percentage of the (white) gift cards?
- There was no direct response to this issue, however, the above response also fits with this.
In the midst of this conversation, I reached out to the Office of Consumer Protection and was put in touch with Emilee Cantrell, Deputy Communications Director for the Montana Department of Justice. Emilee was happy to look into my question, which was "Are Montana businesses required to honor gift cards, even if the business was purchased by another group?"
The Answer Is... Mostly Clear
According to Emilee, and the Montana Department of Justice:
Based on my understanding, businesses are not required to accept the gift cards of an old business, unless it was agreed to when the business was bought/sold.
Cut and dry for us, the people who BOUGHT the cards... but now the issue stands... did The Rustic, or did they not, have an agreement in place with the prior owner to honor the cards?
Well, I replied to The Rustic, and asked more questions:
- To clarify, you purchased this... and the last owners agreed to pay you back in your purchase contract if you honored the gift cards?
- "His gift cards not the cards the owner he buy it from."
- If that is the case, they (the prior owners) have not been honoring their agreement with you (on paper, I assume), so you have simply stopped honoring that agreement.
- "The agreement from the guy we buy it from has brown gift cards the owner he buy from has white gift cards we honor his the brown but the white gift cards have no tracking we can’t see how much is on the card or anything so it’s like taking counterfeit money"
- Is it possible the previous owners have records of the gift cards, so you can track them?
- This was not answered.
- The 90-day warning, where was that posted for the public to see? Just on Facebook?
- "90 day was on website and in store."
A bit murky, but from what I gather, the former owners (Owner #2) used the brown gift cards, and these new owners have continued to use them, allowing for tracking and such. However, the white cards are from the original owner (Owner #1), and are untrackable without access to the systems they used to issue the cards.
A Few More Questions...
In my final two replies, I asked the following:
- Did the previous owners also honor the white gift cards? Or, why the sudden change to no longer honor them (assuming Owners #2 honored them)?
- "We honor gift cards from owner before us that when we buy we put in the contract. When we first started he say yes after we buy it was not true."
- So, the prior owner only gave you a verbal agreement on (honoring) the gift cards?
- "No on his card it’s in the contract but the 1st owner was not he just say. The first owner cards r on a different system we don’t have access too"
Sounds to me like I hit the nail on the head. The 1st Owner told the 2nd Owner they would honor any gift cards, and repay them (Owner #2). When the 2nd Owners sold it to the new owners, it sounds like they alluded to that agreement standing (essentially connecting Owners #1 and Owners #3 to settle any balances from the white gift cards) however that has not happened, leading the current owners of The Rustic to lose over $16,000 in merchandise honoring these white gift cards... issued sometime in the past.
Got that? What a tangled web that has been weaved.
What Do We Do Now?
According to the current ownership, if you reach out to them about your white gift card, they will provide you details to contact the owners who issued those cards, to hopefully settle the issue. Not ideal, certainly, but it is something.
Want to know the true solution? It's an unpopular opinion, I'm sure, but... quit buying gift cards directly from the business. Buy a prepaid debit card instead. They work anywhere that accepts debit/credit and doesn't expire. (The physical card WILL expire, but the money is safe. You just order a new card)
That way, you still help local businesses... and also prevent these issues from ever happening. Because, as I see it right now, your money on that white gift card is as good as gone. But you cannot blame these new owners, who have certainly gone ABOVE AND BEYOND already... honoring $16,000+ from these cards... and giving patrons a few months' notices of expiration.
What are your thoughts on this? Will you continue buying gift cards to your favorite local spots? Let us know on App Chat or on Facebook.