Since Yellowknife’s Merle Norman spa closed at the end of August, customers have been getting in touch with Cabin Radio about unused gift cards.
Several residents report purchasing the cards, valued at $100 or more, at a customer appreciation event held in the weeks leading up to the store’s closure – at a time when none of them knew the business was set to fold.
We tried to find out what recourse customers have when they purchase gift cards from a business that subsequently ceases to be.
The answer is not great for those customers: in practice, other than taking the owner to court, there is not much you can do that will guarantee getting your money back quickly and efficiently.
Sasha Jason, the owner of Yellowknife’s Merle Norman spa, did not respond to our request for comment on September 9. In a Facebook post to the spa’s page, Jason had said the business was closing owing to circumstances beyond her control.
In that post, Jason said she would contact some clients to “discuss arrangements” and invited others to message her if they had concerns.
While many residents expressed appreciation, sadness at the closure, and best wishes to Jason in the comments beneath that post, some contacted Cabin Radio to complain about what they perceived to be unfair treatment.
One customer, who asked not to be named as “it’s a small town,” said Jason had refused her request for a refund.
“I’m stuck with a gift card that’s useless,” the woman said. “It sounded like she was going to look after people, but she isn’t. She said there’s nothing she can do.
“I’m out $165. I feel like I’ve been hoodwinked.”
In messages to customers seen by Cabin Radio, Jason writes: “Unfortunately, as when any store is forced to close, any unused gift cards lose their value and no refund is possible.
“I apologize for the inconvenience this may cause and appreciate your understanding that this policy is out of my control.”
Another customer contacting Cabin Radio wrote: “Providing a cash refund or product in lieu of cash is totally within her control.
“All those who purchased gift cards in good faith do not understand.”
Gift cards not regulated
Merle Norman is a California-based seller of cosmetics that lends its name to a series of independently operated spas throughout the US and Canada.
Merle Norman’s head office did not respond to our request for comment and clarification regarding the gift cards on September 11. Two customers advised Cabin Radio they had been told their gift cards purchased in Yellowknife were not transferable to other Merle Norman locations.
In the NWT, the Department of Municipal and Community Affairs controls consumer affairs legislation. The department says gift cards in the NWT are not regulated.
“If you have a gift card for a business that has closed, your options may be limited,” a poster produced by the department states.
A spokesperson for the department said it can, in some circumstances, mediate disputes between customers and businesses.
“While the GNWT does not have a legislative authority to force a resolution when disputes have arisen between a consumer and businesses, we may be able to successfully mediate the dispute to the satisfaction of both parties,” spokesperson Jay Boast said by email.
That process can be triggered by filling out and submitting a form.
“Ultimately, if consumers are unable to obtain a resolution to their concerns, there remains the option of the consumer filing a small claims action in the NWT court system in an attempt to seek satisfaction,” Boast added.
Ken Whitehurst, executive director of the Consumers Council of Canada, agreed a civil claim is one of the only options that might give customers some hope of getting their money back.
“Who knows if the amounts are worth it,” said Whitehurst.
“Gift cards are unsecured,” he wrote. “You’re putting your faith in the merchant.
“In some of the provinces there are gift card laws. Ontario has a gift card law, but it wouldn’t offer much protection in a situation where a merchant is going out of business.”
Whitehurst added: “What might be at issue would be whether the merchant issued the cards knowing they would not be able to honour them. That would have to be proven, but could put them in a position to be sanctioned, so informed of that they might decide to provide restitution if they can rather than face other things that could happen to them.”
Sarah Pruys contributed reporting.