Part 5- Altruism & Procrastination
“For St. Augustine the social order lay in the teachings of Christ. For Hobbes it lay in the
sovereign. For Rousseau it lay in solitude. For Lenin it lay in the party. They were all
wrong. The roots of social order are in our heads, where we possess the instinctive
capacities for creating not a perfectly harmonious and virtuous society, but a better one
than we have at present. We must build our institutions in such a way that they draw out
those instincts… and trust is the foundation of virtue.” –Matt Ridley
Although, in these most difficult of financial times brought upon us in part by our great banking institutions, we may find our cushion of personal funds to be extremely low and leave us no room for mistakes or niceties life has to offer we, as a nation, still find it in our hearts to be able to donate 2.2% of the value of the Nation’s Gross Domestic Product to charity ($307.65 Billion in 2008). And contrary to popular belief, 75% or $229.28 Billion came from individuals, not corporations and government. In fact, only 5% came from corporations, the same corporations which chose to keep your unused funds from gift cards. Altruism seems to be an inherent trait within us that can be lost or magnified depending on our upbringing. Teach a child to be selfish and as an adult he’ll hoard every penny and benefit no one; teach a child to share and as an adult he’ll be one of the great benefactors of our future, one who through donations of time and money will assist in reshaping our planet for the advancement of allkind!
Of all the definitions and explanations of altruism I have read Kristen Monroe has summed it up the most concise when she explained altruism as, “behavior intended to benefit another, even when doing so may risk or entail some sacrifice to the welfare of the actor”. She then went on to define 4 characteristics of altruism, “…first, it entails action; second, the goal of the act furthers the welfare of another; third, intentions count more than consequences; and fourth, the act diminishes the welfare of the altruistic agent.” I whole heartedly agree with the first three; first one must begin to do something, second, it should help another or a cause which benefits many, third, it doesn’t matter how much you give it just matters that you do give because a lot of people giving a small amount adds up fast. As for the fourth characteristic I totally disagree, especially since in most altruistic acts there is some form of indirect reciprocity, the giver benefits is one way or another, whether now or later, whether with money or friendship or vanity (bragging rights) or just that “warm glow” feeling. And, when using a Matter Of Change card, there is no monetary loss to the giver, the funds which don’t get used and are traditionally “donated” back to the banks, corporations, or government will be actually donated to the giver’s charity of choice benefiting someone, somewhere (and providing the giver with a tax receipt if applicable)!
On procrastination much research has been done yet for the general public it is mostly misunderstood. The general consensus seems to be that if you are given a longer span of time to complete a task the more likely it is that the task will be completed, this is actually the reverse, even when dealing with enjoyable tasks! One experiment showed that individuals given gift certificates with a two week expiration date had a 31% redemption rate as opposed to those given the same gift certificates with a 2 month expiration date which had a 6% redemption rate. Similar research has shown that when individuals see an offer with a longer expiration date their level of satisfaction rises yet they are less likely to respond to those offers.
Armed with this information and the new CARD Act, which will take effect in August 2010 which almost completely eliminates expiration dates from gift/prepaid cards, we are left to surmise that the consumer will see these cards as much more attractive but ultimately leave even more than the usual 8% - 14% of their value unused thereby benefiting the companies, banks, and government with an even larger amount of unused funds to split between them!
Is someone trying to pull the wool over our eyes by leading us to believe this is for our benefit, in our best interest?
I leave that for you to answer! Let me know what you think and how you feel. Remember, every opinion counts, we actually ARE building this card for your benefit and the benefit of everyone in our ever expanding global society!
Darren Cannao
President/Founder, Matter Of Change
Darren@MatterOfChange.com
Monday, April 26, 2010
Sunday, April 25, 2010
Part 4- Government Spending
Here’s another mystical arena, where does all that money go? And how much goes? Well, after a small amount of research I found a very interesting website, http://www.usaspending.gov/, which lists the spending of the Federal Government and breaks it down if you wish and I wished! So to sum up the spending in 2009 (and just on the top 10 contractors for each department are listed!) I have put this small list together for you to review and to consider how much more money you want to freely hand over to the government for wasteful spending.
Total governmental contracted spending for Fiscal Year 2009 is just above $523 Billion and it breaks down like so:
Department, Contracted Amounts, % of ALL awarded $
1. Agriculture, $5.08 Billion, 1%
2. Commerce*, $3.10 Billion, 0.6%
3. Defense*, $365.8 Billion, 69.8%
4. Education, $1.42 Billion, 0.3%
5. Energy*, $31.15 Billion, 5.9%
6. Health & Human Svc’s*, $18.75 Billion, 3.6%
7. Homeland Security*, $13.62 Billion, 2.6%
8. HUD*, $739.4 Million, 0.1%
9. Interior, $4.17 Billion, 0.8%
10. Justice*, $6.74 Billion, 1.3%
11. Labor, $2.24 Billion, 0.4%
12. State, $6.86 Billion, 1.3%
13. Transportation*, $5.06 Billion, 1.0%
14. Treasury*, $4.59 Billion, 0.9%
15. Veterans Affairs, $14.4 Billion, 2.7%
16. EPA*, $1.75 Billion, 0.3%
17. General Svc’s Admin, $14.09 Billion, 2.7%
18. NASA*, $14.86 Billion, 2.8%
19. Nat’l Science Foundation, $488.5 Million, -0.1%
20. Nuclear Regulatory Comm*, $203.6 Million, -0.1%
21. Office of Personnel Mgmt, $781.3 Million, 0.1%
22. Small Business Admin, $86.9 Million, -0.1%
23. Social Security Admin, $1.03 Billion, 0.2%
24. US Agency for Int’l Dvpm't, $5.17 Billion, 1.0%
25. All other Agencies*, $1.46 Billion, 0.3%
*Lockheed Martin is on the Top 10 list of contractors for these (*) Departments and their total contracted awards for 2009 from the US Government EXCEED $37.8 Billion!!
How scary are those numbers? Now why, after reading Part 3 on banks and the above figures, would anyone consider donating anymore money than necessary to those two giants of gross spending or gross over-spending?
“I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we save means that their life will be so much the more abundant.” - President Calvin Coolidge
I don’t know why anyone would rather allow their unused money revert to bank and government coffers instead of directing it to a charity of their choice and having it utilized in a very helpful way by very grateful people!
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
Here’s another mystical arena, where does all that money go? And how much goes? Well, after a small amount of research I found a very interesting website, http://www.usaspending.gov/, which lists the spending of the Federal Government and breaks it down if you wish and I wished! So to sum up the spending in 2009 (and just on the top 10 contractors for each department are listed!) I have put this small list together for you to review and to consider how much more money you want to freely hand over to the government for wasteful spending.
Total governmental contracted spending for Fiscal Year 2009 is just above $523 Billion and it breaks down like so:
Department, Contracted Amounts, % of ALL awarded $
1. Agriculture, $5.08 Billion, 1%
2. Commerce*, $3.10 Billion, 0.6%
3. Defense*, $365.8 Billion, 69.8%
4. Education, $1.42 Billion, 0.3%
5. Energy*, $31.15 Billion, 5.9%
6. Health & Human Svc’s*, $18.75 Billion, 3.6%
7. Homeland Security*, $13.62 Billion, 2.6%
8. HUD*, $739.4 Million, 0.1%
9. Interior, $4.17 Billion, 0.8%
10. Justice*, $6.74 Billion, 1.3%
11. Labor, $2.24 Billion, 0.4%
12. State, $6.86 Billion, 1.3%
13. Transportation*, $5.06 Billion, 1.0%
14. Treasury*, $4.59 Billion, 0.9%
15. Veterans Affairs, $14.4 Billion, 2.7%
16. EPA*, $1.75 Billion, 0.3%
17. General Svc’s Admin, $14.09 Billion, 2.7%
18. NASA*, $14.86 Billion, 2.8%
19. Nat’l Science Foundation, $488.5 Million, -0.1%
20. Nuclear Regulatory Comm*, $203.6 Million, -0.1%
21. Office of Personnel Mgmt, $781.3 Million, 0.1%
22. Small Business Admin, $86.9 Million, -0.1%
23. Social Security Admin, $1.03 Billion, 0.2%
24. US Agency for Int’l Dvpm't, $5.17 Billion, 1.0%
25. All other Agencies*, $1.46 Billion, 0.3%
*Lockheed Martin is on the Top 10 list of contractors for these (*) Departments and their total contracted awards for 2009 from the US Government EXCEED $37.8 Billion!!
How scary are those numbers? Now why, after reading Part 3 on banks and the above figures, would anyone consider donating anymore money than necessary to those two giants of gross spending or gross over-spending?
“I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we save means that their life will be so much the more abundant.” - President Calvin Coolidge
I don’t know why anyone would rather allow their unused money revert to bank and government coffers instead of directing it to a charity of their choice and having it utilized in a very helpful way by very grateful people!
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
Saturday, April 24, 2010
Part 3- Banks
"Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out." –Andrew Jackson to a delegation of bankers in 1832
This was part of President Andrew Jackson’s veto to the Bank Renewal bill, he saw then that the banks played with the people’s money and when advantageous to the bank kept the profits but when they lost their bets they sought relief from the government. This is oddly similar to the Bank Bailout which according to Simon Johnson, the former Chief Economist at the International Monetary Fund, will cost the US Government, and ultimately the taxpayers, $4 TRILLION!!!!
And more recently than President Jackson’s referral we have the 1989 collapse of the savings and loan industry. In 1989 Congress gave $50 Billion to its newly created Resolution Trust Corp to resolve the troubled savings and loan institutions' debacle. That $50 Billion “gift” ultimately cost the taxpayers $124 Billion after 6 years! Haven’t we learned enough from history to prevent us from repeating it? Who is running the banks anyway, Henry F. Potter?
"The money powers prey upon the nation in times of peace, and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies, all who question their methods or throw light upon their crimes.” – Abraham Lincoln
Now, as the Bank Bailout has begun to lose its headline steam we read that 6 Wall Street giants have already set aside $39.2 Billion for 1st quarter payouts alone! Among them is Goldman Sachs, which has set aside $5.5 Billion to pay 33,100 employees (2% less employees than last year) in quarter 1 of 2010! Now, on April 16, 2010, the SEC charged Goldman, Sachs & Co as well as Fabrice Tourre, a Goldman Sachs VP, for defrauding investors! The SEC basically alleges Goldman Sachs permitted a client who was betting heavily AGAINST the housing market to influence which mortgage securities would be placed into a particular investment portfolio then told the investors that the securities were picked by an objective and independent 3rd party!
Knowing this and every other way banks usurp the laws and bend the rules with their lobbying, is there any reason for the people to voluntarily turn over even more money to them? Does all of our control over money have to be forfeited? I say NO!
To wrap up Part 3, I will leave you to ponder an excerpt from the St. Louis Federal Reserve Bank “Review” from November 1975:
"The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money ..."
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
"Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out." –Andrew Jackson to a delegation of bankers in 1832
This was part of President Andrew Jackson’s veto to the Bank Renewal bill, he saw then that the banks played with the people’s money and when advantageous to the bank kept the profits but when they lost their bets they sought relief from the government. This is oddly similar to the Bank Bailout which according to Simon Johnson, the former Chief Economist at the International Monetary Fund, will cost the US Government, and ultimately the taxpayers, $4 TRILLION!!!!
And more recently than President Jackson’s referral we have the 1989 collapse of the savings and loan industry. In 1989 Congress gave $50 Billion to its newly created Resolution Trust Corp to resolve the troubled savings and loan institutions' debacle. That $50 Billion “gift” ultimately cost the taxpayers $124 Billion after 6 years! Haven’t we learned enough from history to prevent us from repeating it? Who is running the banks anyway, Henry F. Potter?
"The money powers prey upon the nation in times of peace, and conspire against it in times of adversity. The banking powers are more despotic than a monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies, all who question their methods or throw light upon their crimes.” – Abraham Lincoln
Now, as the Bank Bailout has begun to lose its headline steam we read that 6 Wall Street giants have already set aside $39.2 Billion for 1st quarter payouts alone! Among them is Goldman Sachs, which has set aside $5.5 Billion to pay 33,100 employees (2% less employees than last year) in quarter 1 of 2010! Now, on April 16, 2010, the SEC charged Goldman, Sachs & Co as well as Fabrice Tourre, a Goldman Sachs VP, for defrauding investors! The SEC basically alleges Goldman Sachs permitted a client who was betting heavily AGAINST the housing market to influence which mortgage securities would be placed into a particular investment portfolio then told the investors that the securities were picked by an objective and independent 3rd party!
Knowing this and every other way banks usurp the laws and bend the rules with their lobbying, is there any reason for the people to voluntarily turn over even more money to them? Does all of our control over money have to be forfeited? I say NO!
To wrap up Part 3, I will leave you to ponder an excerpt from the St. Louis Federal Reserve Bank “Review” from November 1975:
"The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money ..."
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
Do you remember growing up as a child and being seated at the dinner table staring at a plate full of vegetables and wondering how you were going to get rid of them when suddenly your mother’s voice rang out saying, “eat everything on your plate, people are starving and you shouldn’t waste food!” Well times have changed, but unfortunately not for everyone. I now do eat all my vegetables but people are still starving, and dying of curable diseases, and living in poverty, and suffering at the hands of others, and growing up not knowing how to read or write, and countless other maladies slowly decaying our society.
So if we were taught not to waste because others, less fortunate than ourselves, could use what we didn’t then why are we still wasting; wasting BILLIONS of dollars per year on unused gift cards and letting those unused funds be recaptured by greedy banks, greedy corporations, and soon the government. Isn’t it about time we took our mothers’ advice and began to dictate to whom OUR unused funds should benefit? Shouldn’t we have the last say as to where our hard earned money should go rather than having banks, corporations, and the government tell us where it will go? Aren’t we regulated enough, taxed enough, and severely over-inflationized (a new word I just made up) enough already?
Together we can take a stand against more rules and regulations which tell us what we have to do rather than simply allow us the opportunity to choose for ourselves. Matter Of Change is coming out with a prepaid card which does just that; offers you, the consumer, the freedom to choose, the freedom to use, and the freedom to make a change.
Go to www.MatterOfChange.com and send us an email, let us know what you think because ultimately YOU are our guiding force, You can help make a positive change in your life and the lives of many others.
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
So if we were taught not to waste because others, less fortunate than ourselves, could use what we didn’t then why are we still wasting; wasting BILLIONS of dollars per year on unused gift cards and letting those unused funds be recaptured by greedy banks, greedy corporations, and soon the government. Isn’t it about time we took our mothers’ advice and began to dictate to whom OUR unused funds should benefit? Shouldn’t we have the last say as to where our hard earned money should go rather than having banks, corporations, and the government tell us where it will go? Aren’t we regulated enough, taxed enough, and severely over-inflationized (a new word I just made up) enough already?
Together we can take a stand against more rules and regulations which tell us what we have to do rather than simply allow us the opportunity to choose for ourselves. Matter Of Change is coming out with a prepaid card which does just that; offers you, the consumer, the freedom to choose, the freedom to use, and the freedom to make a change.
Go to www.MatterOfChange.com and send us an email, let us know what you think because ultimately YOU are our guiding force, You can help make a positive change in your life and the lives of many others.
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
Every year BILLIONS of dollars on gift cards goes unused and those unused funds go back to the issuing banks, issuing corporations, and, now with the new CARD Act taking effect in
August 2010, to the Government Treasuries. We at Matter Of Change find this outrageous; why should these BIG WIGS, who we’ve been bailing out for squandering and wasting money be entitled to even more of our hard earned money?
THEY SHOULDN’T!
And Matter Of Change is here to make sure this doesn’t happen anymore.
We are launching a new prepaid gift card product which allows you to “link” the card to a charity of your choice and expire the card in a timeframe you choose. Once expired, any remaining balance will be donated to your chosen charity in either your name or the recipient’s name. If nothing remains then that means the card has served it’s purpose but if a small balance remains, which averages 8% - 14%, you need not worry about wasting the giver’s money, it goes to a good cause, one that YOU choose, to help the world. Matter Of Change has not officially launched yet due to pressures from outside sources which would be “losing” their undeserved rewards but with your help and acknowledgements together we can show the world that we care. A little change from a lot of caring people goes a long way! The beauty of this product is the fact that we are not asking anyone to donate, we understand times are tough, we are asking you to use our cards and use them for anything you want or need, the donations come from “leftovers”, money that for now
reverts back to where it is needed LEAST.
So please visit our website, www.MatterOfChange.com, join our group MATTER OF CHANGE on Facebook, and send us any and all of your comments, questions, and concerns because we built this company for you; and your input counts!
Every time someone visits our site, joins our group or sends us a comment it takes us one step closer to
becoming a reality, creating a product for the people by the people.
We have become a global society and our actions echo around the world and by standing together we can make decisions today which will affect our tomorrow.
August 2010, to the Government Treasuries. We at Matter Of Change find this outrageous; why should these BIG WIGS, who we’ve been bailing out for squandering and wasting money be entitled to even more of our hard earned money?
THEY SHOULDN’T!
And Matter Of Change is here to make sure this doesn’t happen anymore.
We are launching a new prepaid gift card product which allows you to “link” the card to a charity of your choice and expire the card in a timeframe you choose. Once expired, any remaining balance will be donated to your chosen charity in either your name or the recipient’s name. If nothing remains then that means the card has served it’s purpose but if a small balance remains, which averages 8% - 14%, you need not worry about wasting the giver’s money, it goes to a good cause, one that YOU choose, to help the world. Matter Of Change has not officially launched yet due to pressures from outside sources which would be “losing” their undeserved rewards but with your help and acknowledgements together we can show the world that we care. A little change from a lot of caring people goes a long way! The beauty of this product is the fact that we are not asking anyone to donate, we understand times are tough, we are asking you to use our cards and use them for anything you want or need, the donations come from “leftovers”, money that for now
reverts back to where it is needed LEAST.
So please visit our website, www.MatterOfChange.com, join our group MATTER OF CHANGE on Facebook, and send us any and all of your comments, questions, and concerns because we built this company for you; and your input counts!
Every time someone visits our site, joins our group or sends us a comment it takes us one step closer to
becoming a reality, creating a product for the people by the people.
We have become a global society and our actions echo around the world and by standing together we can make decisions today which will affect our tomorrow.
Common Gift Card Misconceptions Under the New CARD Act
1. Gift cards do not expire:
WRONG!!!! Gift cards will still expire just not before 5 years UNLESS certain criteria are met then the cards can expire whenever the issuer chooses.
2. Gift cards will no longer have fees:
WRONG!!!! Gift cards will have monthly maintenance fees if the cards remain dormant for 12 consecutive months; this means if you forget about the card or lose it it will remain dormant and the issuing bank will slowly drain the funds from it.
3. The longer time frame I have to use the gift card the more likely it is that I will use it:
WRONG!!!! According to psychological research and field tests the reverse is actually true. When given a longer period of time to redeem a coupon almost 75% of the subjects actually let the time lapse and the coupons expire but with the subjects given a shorter time frame almost 83% redeemed their coupons.
4. The new CARD Act was created to help the consumer battle the banks:
WRONG!!!! The CARD Act has been put in place to assist the Government from the costs associated with bringing large corporations to court to battle over the unused funds remaining on gift cards when they expire! The laws now consider the unused funds left on gift cards to be “unclaimed property” and therefore subject to each state’s escheat laws and being most states escheat laws take effect PRIOR to 5 years the states can claim the unused funds BEFORE the banks and corporations get to capture them thereby evading any costly court battles!
So before you buy your next gift card visit www.MatterOfChange.com where our gift cards allow you, the consumer, a much more useful option for your unused funds. Haven’t we already given the Banks enough money already
($700 Billion Bailout)?
www.MatterOfChange.com,
Where honest, caring people go for a gift card that says “I really do care”
1. Gift cards do not expire:
WRONG!!!! Gift cards will still expire just not before 5 years UNLESS certain criteria are met then the cards can expire whenever the issuer chooses.
2. Gift cards will no longer have fees:
WRONG!!!! Gift cards will have monthly maintenance fees if the cards remain dormant for 12 consecutive months; this means if you forget about the card or lose it it will remain dormant and the issuing bank will slowly drain the funds from it.
3. The longer time frame I have to use the gift card the more likely it is that I will use it:
WRONG!!!! According to psychological research and field tests the reverse is actually true. When given a longer period of time to redeem a coupon almost 75% of the subjects actually let the time lapse and the coupons expire but with the subjects given a shorter time frame almost 83% redeemed their coupons.
4. The new CARD Act was created to help the consumer battle the banks:
WRONG!!!! The CARD Act has been put in place to assist the Government from the costs associated with bringing large corporations to court to battle over the unused funds remaining on gift cards when they expire! The laws now consider the unused funds left on gift cards to be “unclaimed property” and therefore subject to each state’s escheat laws and being most states escheat laws take effect PRIOR to 5 years the states can claim the unused funds BEFORE the banks and corporations get to capture them thereby evading any costly court battles!
So before you buy your next gift card visit www.MatterOfChange.com where our gift cards allow you, the consumer, a much more useful option for your unused funds. Haven’t we already given the Banks enough money already
($700 Billion Bailout)?
www.MatterOfChange.com,
Where honest, caring people go for a gift card that says “I really do care”
Part 2-The Bottom Line
The following excerpts are taken from the Journal Of Accountancy, December 2007.
1…gift card ‘breakage’, or the portion of gift card balances that consumers fail to redeem for merchandise, can boost a retailer’s short-term cash flows. In the long term, gift card breakage can enhance the bottom line of the retailer – or state treasuries…
A…interviews with the directors of unclaimed property in several states suggest that the amounts escheated from gift cards are substantial…
2…the continued growth in the sale of gift cards has made breakage no longer just a byproduct of gift cards, but a potentially material contributor to profit in its own right…
3…the fundamental question for society to answer is, “Who better holds the interests of the consumer with regard to prepaid, but unclaimed, gift card balances?”
Let’s take these one at a time:
1 and 1A. Money we pay for the purchase of gift cards increases retailers’ short-term cash flows, enhances their long-term bottom lines, and/or increases the states’ treasuries! I have but one question for this, WHY? If I pay for something is it not mine regardless of if or how I use it? Do I have to return the unfinished portion of a meal simply because I am full? That’s completely absurd.
2. So, am I to understand that gift cards are sold for a dual purpose? First, to be used by the consumer. Second, to hopefully recapture the unused funds for no service or product.
I completely understand that it costs money to manage these accounts but not to the tune of 10% of the card’s value!
Also, when given a longer timeframe to complete a task, redeeming a gift card included, we are less likely to actually complete it and conversely, when given a smaller window we are much more likely to complete the task. This makes one think, “Who’s best interest is in mind when removing expiration dates from gift cards? If it is in the consumer’s best interest then the breakage should NOT fall under escheat laws and revert to the states’ treasuries. If it is in the states’ best interests then keep the new CARD Act in place and mask it as a consumer friendly law!
3. This question is great! Who better than me has my best interests in mind? Does anyone really have a more genuine reason for keeping my best interests ahead of any other than me? NO!
Let’s be real and upfront for once, OUR best interests have not been at the forefront of law since the writing of the Declaration Of Independence. We the people have our best interests in mind, we are not masquerading the truth nor are we blurring conceptions of reality, we would like to keep, or more appropriately REGAIN, some small amount of control over our hard earned money!
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
The following excerpts are taken from the Journal Of Accountancy, December 2007.
1…gift card ‘breakage’, or the portion of gift card balances that consumers fail to redeem for merchandise, can boost a retailer’s short-term cash flows. In the long term, gift card breakage can enhance the bottom line of the retailer – or state treasuries…
A…interviews with the directors of unclaimed property in several states suggest that the amounts escheated from gift cards are substantial…
2…the continued growth in the sale of gift cards has made breakage no longer just a byproduct of gift cards, but a potentially material contributor to profit in its own right…
3…the fundamental question for society to answer is, “Who better holds the interests of the consumer with regard to prepaid, but unclaimed, gift card balances?”
Let’s take these one at a time:
1 and 1A. Money we pay for the purchase of gift cards increases retailers’ short-term cash flows, enhances their long-term bottom lines, and/or increases the states’ treasuries! I have but one question for this, WHY? If I pay for something is it not mine regardless of if or how I use it? Do I have to return the unfinished portion of a meal simply because I am full? That’s completely absurd.
2. So, am I to understand that gift cards are sold for a dual purpose? First, to be used by the consumer. Second, to hopefully recapture the unused funds for no service or product.
I completely understand that it costs money to manage these accounts but not to the tune of 10% of the card’s value!
Also, when given a longer timeframe to complete a task, redeeming a gift card included, we are less likely to actually complete it and conversely, when given a smaller window we are much more likely to complete the task. This makes one think, “Who’s best interest is in mind when removing expiration dates from gift cards? If it is in the consumer’s best interest then the breakage should NOT fall under escheat laws and revert to the states’ treasuries. If it is in the states’ best interests then keep the new CARD Act in place and mask it as a consumer friendly law!
3. This question is great! Who better than me has my best interests in mind? Does anyone really have a more genuine reason for keeping my best interests ahead of any other than me? NO!
Let’s be real and upfront for once, OUR best interests have not been at the forefront of law since the writing of the Declaration Of Independence. We the people have our best interests in mind, we are not masquerading the truth nor are we blurring conceptions of reality, we would like to keep, or more appropriately REGAIN, some small amount of control over our hard earned money!
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
Part 1- Gift/prepaid Cards
Gift/prepaid cards have evolved from the humble gas card introduced by Mobil Oil Company in 1995 to the first major retail gift card offered by JC Penney in 1996 to Target in 1999 to the vast market of today. The total sale of gift cards in 1999 was $19 billion which jumped to $37 billion in 2002 to the 2009 total gift/prepaid market of $116 billion. They have gone from a passive role within the plastic payment option companies to a much larger core business product generating huge sums of money for retailers and banks alike. Gift cards have also evolved from a “once in a while” gift into the most requested gift due in large part to their convenience of gift choices for the recipient. But as with many “good” things, gift cards have a dark side as well. Until recent scrutiny of gift cards, the public has not been privy to nor very interested in the alternate revenue stream for retailers and banks created by gift cards. This alternate revenue stream which is created by funds being left on the cards once they expire has been termed “breakage” or “spillage”. This breakage is producing profits for the banks and retailers to the tune of $8 billion or averaging 10% of the total loaded value of these cards (discussed further in parts 2, 3, and 4).
As the popularity of gift and prepaid cards have flourished and expanded so have their critics and the many reasons for not wanting nor giving the cards (although still a vast minority). Even against major criticism from the press and government the gift and prepaid card arena has exploded wildly with cards available for purchase for any imaginable occasion, in every type of media, from physical to virtual via email or SMS.
History has shown us the gift and prepaid card market has done nothing except grow, with continued growth estimates of 28% compounded growth annually until at least 2014.
So why do we give gift cards? That question has many answers and I will discuss a few of them here. One major reason for giving a gift card is convenience, it allows the recipient to purchase a gift which they will get use from rather than giving a gift that will end up being re-gifted or put on a shelf never to be seen again. Another reason is that gift/prepaid cards are more convenient than cash and if lost or stolen can usually be reclaimed from the issuing company as opposed to cash, unless like Woody on “Cheers” and you actually remember the individual bills’ serial numbers! The last of the “big” reasons for giving gift/prepaid cards is to teach children how to budget, these are usually prepaid cards loaded with small amounts of money and given to teens and college students in lieu of cash.
And now for the opposition! Above all is the idea that gift/prepaid cards are too impersonal. This does have some merit especially if one randomly grabs a gift card off a rack at the last minute but then again, who’s fault is it for last minute shopping anyway? (A solution to this problem as well as all the others following this will be discussed in Part 5, it’s a real wing-dinger!) The next big complaint from consumers is closed-loop or store branded gift cards lock the recipient into shopping at one particular store or chain. Finally, after many articles and much press coverage, people are concerned that the recipient won’t use all of the funds or will forget they have the card and let it expire unused.
Gift/prepaid cards offer both pros and cons but in the end they still remain and will continue to remain the #1 asked for gift from consumers so the least we can do is give you a card which will benefit you, your recipient, and many others.
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
Gift/prepaid cards have evolved from the humble gas card introduced by Mobil Oil Company in 1995 to the first major retail gift card offered by JC Penney in 1996 to Target in 1999 to the vast market of today. The total sale of gift cards in 1999 was $19 billion which jumped to $37 billion in 2002 to the 2009 total gift/prepaid market of $116 billion. They have gone from a passive role within the plastic payment option companies to a much larger core business product generating huge sums of money for retailers and banks alike. Gift cards have also evolved from a “once in a while” gift into the most requested gift due in large part to their convenience of gift choices for the recipient. But as with many “good” things, gift cards have a dark side as well. Until recent scrutiny of gift cards, the public has not been privy to nor very interested in the alternate revenue stream for retailers and banks created by gift cards. This alternate revenue stream which is created by funds being left on the cards once they expire has been termed “breakage” or “spillage”. This breakage is producing profits for the banks and retailers to the tune of $8 billion or averaging 10% of the total loaded value of these cards (discussed further in parts 2, 3, and 4).
As the popularity of gift and prepaid cards have flourished and expanded so have their critics and the many reasons for not wanting nor giving the cards (although still a vast minority). Even against major criticism from the press and government the gift and prepaid card arena has exploded wildly with cards available for purchase for any imaginable occasion, in every type of media, from physical to virtual via email or SMS.
History has shown us the gift and prepaid card market has done nothing except grow, with continued growth estimates of 28% compounded growth annually until at least 2014.
So why do we give gift cards? That question has many answers and I will discuss a few of them here. One major reason for giving a gift card is convenience, it allows the recipient to purchase a gift which they will get use from rather than giving a gift that will end up being re-gifted or put on a shelf never to be seen again. Another reason is that gift/prepaid cards are more convenient than cash and if lost or stolen can usually be reclaimed from the issuing company as opposed to cash, unless like Woody on “Cheers” and you actually remember the individual bills’ serial numbers! The last of the “big” reasons for giving gift/prepaid cards is to teach children how to budget, these are usually prepaid cards loaded with small amounts of money and given to teens and college students in lieu of cash.
And now for the opposition! Above all is the idea that gift/prepaid cards are too impersonal. This does have some merit especially if one randomly grabs a gift card off a rack at the last minute but then again, who’s fault is it for last minute shopping anyway? (A solution to this problem as well as all the others following this will be discussed in Part 5, it’s a real wing-dinger!) The next big complaint from consumers is closed-loop or store branded gift cards lock the recipient into shopping at one particular store or chain. Finally, after many articles and much press coverage, people are concerned that the recipient won’t use all of the funds or will forget they have the card and let it expire unused.
Gift/prepaid cards offer both pros and cons but in the end they still remain and will continue to remain the #1 asked for gift from consumers so the least we can do is give you a card which will benefit you, your recipient, and many others.
Darren Cannao
President, Matter Of Change
Darren@MatterOfChange.com
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