Holders of $895-a-Year AmEx Card Are Rushing to Spend Saks Perk
(Bloomberg) — American Express cardholders and other customers are rushing to spend their store credits and gift cards at Saks Fifth Avenue as the cash-strapped retailer moves toward a potential bankruptcy reorganization.
When a company files for bankruptcy, it doesn’t automatically have to accept gift cards, sometimes leaving consumers empty-handed.
That’s worrying for clients like Julia Portela, a 38-year-old travel content creator who lives in Miami. American Express Co. The Platinum card has an annual fee of $895 and includes a $50 credit at Saks twice a year.
“Everyone is going to try to go to Saks,” Portela said. “We don’t know what could happen.”
American Express has millions of cardholders but does not disclose how many have the Platinum version. The Saks benefit remains unchanged at this time, American Express said in a statement.
A representative for Saks Global Enterprises, which owns the retailer, did not respond to requests for comment.
Portela, who also has Saks gift cards worth a total of $300, has been conducting a WhatsApp chat with more than 100 people for travel tips, many of whom are anxious about the news of the bankruptcy. She also received numerous messages from travel influencers she follows advising her to cash out her Saks gift cards immediately.
“This rush is an old thing, reminiscent of the bank run,” said Edward Morrison, a Columbia University law professor and bankruptcy expert. “Saks potentially feels its resources are being depleted as products are now distributed via gift cards.”
According to Morrison, Saks has incentives to protect its brand and honor gift cards and credits. The retailer may try to favor customers in bankruptcy court, but ultimately courts have the authority to decide whether a company must accept gift cards after filing for Chapter 11 bankruptcy, where it seeks to restructure debt to stay in business.
“There is a high probability that Saks will meet these with bankruptcy,” Morrison said. But “given the uncertainty, it makes sense for customers to use these cards now.”
Previous retail bankruptcies show different approaches. Craft store chain Joann Inc. Last year, it stopped accepting online gift cards, refunds and returns two weeks after court approval. In 2008, Sharper Image said shoppers had to spend their entire balance in one visit, and the purchase had to be twice the card value.
–With help from Paige Smith.
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