Gift Cards: Beware The Hidden Fees

(CBS)  From 5th Avenue to Walmart, and from the mall to McDonald's, gift cards are the number one Christmas present this year.

This year's "it" gift looks like a credit card and seems a bit classier than cash.

"It's a great way to give a present when you're not sure what to get, and I'm not that good at gift giving so it gives the recipient the flexibility to get what they want," says shopper Matthew Tuttle.

But, as CBS News Correspondent Byron Pitts reports, this holiday season, it's a $17 billion business with a blemish.

Mary Reardon's son got a $10 gift card from his school, but "when we went to use it the balance was zero," she says.

She says she was annoyed upon finding out the card had expired - its value gone.

"There are so many instructions and rules for these things," says Reardon. "I don't know how they expect anyone to use these.

"It's supposed to be a gift."

Reardon and her son Matthew learned the hard way. Not all gift cards are created equally. There are retail gift cards and bank-issued cards. The difference is it's all in the fine print.

With retail cards there's no purchase fee. Some have an expiration date, but most don't.

The so-called bank-issued cards, which carry the logo of a major credit card, have any number of fees: from a purchase fees to monthly fees to renewal fees and replacement fees. Some even have expiration fees. All chip away at the card's value.

"It is the gift that keeps on taking and taking and taking until it's gone," says Massachusetts Attorney General Thomas Reilly.

Reilly, just like the attorneys general in two other states, filed a lawsuit against Simon Property Group, the nation's largest owner of shopping malls and distributor of it's own gift card.

"If it's $25, it should be $25," says Reilly. "If it's $50, it should be $50.

"And I'm totally opposed to these types of thieves that kick in and take that money."

While states like Massachusetts have their own gift certificate laws, Simon Mall contends its gift card works like a bank-issued credit card and is therefore protected by federal law.

No matter, Reardon says, she's done with Simon Mall.

"People still prefer cash over gift cards, so that's what I'm doing this year," she says. "I'm going back to cash."

Her advice to holiday shoppers: You've been warned.