Gift cards are playing an increasingly vital role in North American retail marketing and governments are taking action to address industry and consumer concerns about this hitherto unregulated field.

According to the results of a new Ipsos Reid poll conducted on behalf of Mark's Work Wearhouse, 72 per cent of Canadians now "strongly" (34 per cent) or "somewhat" (38 per cent) agree that they would prefer to receive a gift card than a traditional gift.

Meanwhile, only three in 10 "somewhat" (22 per cent) or "strongly" (six per cent) disagree that this is the case, according to the poll results announced in November.

"The gift card takes a lot of pressure off the buyer," Derek Nighbor of Toronto, vice-president of national affairs of the Retail Council of Canada (RCC), told Business Edge. "It's good for business. It's good for customer service."

Nighbor's comments are supported by Statistics Canada research papers that provide a clear indication that gift cards have become a permanent part of the country's retail landscape.

Last year, Statistics Canada published Gift Cards: The Gift of Choice which reveals that 82 per cent of stores owned by large retailers offered gift cards in 2005, a 29-per-cent increase from the 53 per cent that offered them two years previously.

Gift cards were most popular with home electronics and appliance stores, where all large retailers offered gift cards by 2005, the paper says.

It adds that the retail groups with the lowest introduction rates in 2003 are catching up. For example, the proportion of clothing stores (including shoes and accessories) offering gift cards had more than doubled in two years to 79 per cent in 2005.

The Statistics Canada report says gift cards have become increasingly successful and can be purchased without going into the store. Telephone, mail and Internet options are available to consumers, and gift cards can be delivered directly to the recipients.

"This combination of accessibility, functionality and diversity has meant that gift cards are now an established retail convenience for many Canadian consumers," the report says.

Nighbor says an increasing percentage of smaller or mid-sized retailers now are jockeying for a piece of the action. "We're seeing more and more small businesses creating their own gift-cards products," says the executive, whose advocacy group represents 40,000 stores of all types across Canada.

"They're only going to evolve," he adds. "They are becoming more flashy and stylish. Retailers are using them as a marketing tool."

In an article published in 2004, U.S. and Canadian retail consultant J.C. Williams Group estimated that the U.S. gift card market grew from $1 billion in 1995 to $45 billion in 2003. "Creative marketing and increased convenience are fuelling much of this growth," the article says.

As consumers have embraced this new purchase medium, governments have received complaints about not receiving full value for the amount paid.

The most frequent focus of these complaints is expiry dates - a tactic that consumer advocates see as a way for sellers of the cards to rid themselves of their obligations.

This has moved some Canadian governments to follow the lead of 24 states in the United States in adopting regulations.

In Ontario, regulations that went into effect on Oct. 1 this year prohibit expiry dates on gift cards, restrict service fees, and require all retailers to disclose gift-card terms and conditions clearly and prominently.

Shopping mall cards will not be covered by the fee restrictions, pending further review of the market over the next six months. The law also does not apply to loyalty cards used to collect rewards or points or cards that are subject to federal jurisdiction, such as prepaid phone cards.

Meanwhile, the Manitoba government adopted regulations, effective Nov. 1 this year, that are similar to Ontario's. Expiry dates are not allowed on gift cards and gift certificates except:

* If the card is issued or sold for a specific good or service, such as a manicure, or;

* If nothing of value is given for the card at the time of issue, such as cards issued for promotional or charitable purposes or as a part of a rewards or loyalty program.

In B.C., the legislature is reviewing a private member's bill that is proposing a ban on expiry dates and to give the consumer the right to a refund of the remaining value of the gift card (or another gift card if the amount is over $5) when he or she buys something that is less than the value of the card.

In addition, the B.C. government is reviewing public responses to a consultation paper and questionnaire issued late in spring 2007 to find out what industry and the public think about regulating gift cards and certificates.

The B.C. paper notes that both the province's Business Practices and Consumer Protection Authority and the Vancouver-based Better Business Bureau of Mainland B.C. continue to receive complaints and inquiries about gift cards and certificates.

Common complaints are expiry dates and service charges, terms and conditions not being fully disclosed, cards not being refundable or cashable, and bankruptcy or changes in business ownership resulting in cards or certificates not being honoured.

RCC's Nighbor said his organization has done whatever it could to assist Ontario, Manitoba and B.C. with their legislative initiatives, such as participating in talks and making written submissions.

The RCC now is participating in exploratory talks with Alberta and the Atlantic provinces, he said.

According to retailers, though, consumers are becoming increasingly enthusiastic about the creation of these cards.

"Canadians love gift cards, whether they are on the giving or receiving end," Mark's Work Wearhouse said in a news release. "Gift cards are one of the top-selling items at Mark's, and the category continues to grow year after year."

In fact, gift cards are becoming such a potent force that they are beginning to shift the centre of the retail sales universe - from the bustling pre-Christmas period to what was up to now dismissed as the dreary January-February slack-sales period.

According to Statistics Canada, this defiance of the laws of physics occurs through the phenomenon of shifting. When consumers purchase the cards, retailers record the value in their accounting systems. However, retailers do not record any actual sales until some or all of the value is redeemed by the card recipient.

"Gift cards are reportedly purchased in large numbers in November or December and given as gifts at Christmas," Statistics Canada says in Gift Cards: A Win-Win Way to Give. "But many are not redeemed until January or later."

(Brock Ketcham is an Edmonton-based writer who specializes in consumer and public policy issues. He can be reached at brock@businessedge.ca)