After 70 years in business, Toys R’ Us announced Wednesday its closing its doors.
The announcement came just hours after Senator Charles Schumer urged the Federal Trade Commission to step in as it relates to gift cards purchased by consumers. Schumer is asking the FTC to take an immediate look into the company to ensure no laws are being violated and to ensure consumers have time to get cash back for unused gift cards.
The chain is planning to sell or close all 8-HUNDRED of its U.S. stores, affecting as many as 33-THOUSAND jobs.
Locally, Toys R Us has stores in Horseheads, Rochester and Syracuse.
Schumer’s letter to Acting FTC Chairwoman Maureen Ohlhausen appears below.
Acting Chairwoman Maureen Ohlhausen:
Thank you for the work you do to protect consumers. I write today to draw your attention to an important issue that has the potential to seriously harm consumers throughout New York and across the country.
As you may know, last September, retail chain Toys R Us announced that it had filed for bankruptcy amidst a $5 billion dollar debt load. Since then, its economic situation has only continued to worsen, leading to clearance plans for several of its stores. Furthermore, news reports as recent as yesterday, are stating that the chain is moving even closer to ending its operations for good. According to those reports, the chain is preparing to fully liquidate its operations – a step that would result in the shuttering of all 800 Toys R Us stores in the U.S. This devastating news is sure to disappoint countless families throughout the country and consumers who solely rely on Toys R Us for their toy products.
Compounding what will surely be a sad loss for U.S. families is the fact that many consumers may have to forgo the use of their Toys R Us gift cards. To date, Toys R Us has not stated what will happen to the remaining gift card balance for users after liquidation, nor have they indicated that they will provide consumers with an opportunity to trade that balance for a cash value. This could mean countless American consumers are left with very little time to use their gift cards before their local stores close. I worry that without the certainty of a pathway to restore the funds or ample time to utilize the balance, consumers will forfeit the opportunity to use their gift cards before they are voided. This would be a particularly frustrating blow for those individuals who just received their gift cards, especially around the recent holiday season.
In order to guarantee that consumers are robustly protected throughout this transition, I am requesting that the Federal Trade Commission (FTC) provide a close and expeditious review of this entire process to ensure that no laws are being violated. I also ask the FTC to do what it can to ensure that Toys R Us is taking every possible step to honor its existing terms of service for its gift cards. In order to educate consumers for future scenarios, I urge the FTC to conduct consumer education to inform individuals of the difficulties around gift card redemption for retailers undergoing bankruptcy, and advise consumers of when they must promptly redeem their cards. It is critical, in the case of Toys R Us or other bankruptcies, that consumers have a full opportunity to take advantage of their gift cards before stores close.
Thank you for the work you and your agency do to protect American consumers. I look forward to working with you on this issue.
U.S. Senator Charles Schumer