These Gift Cards Sold at Costco Have Lost All Their Value — Have You Been Affected?
The gift cards are now worthless, leaving shoppers with unclaimed balances.
Key Takeaways
- Synergy World, which issued restaurant gift cards sold at Costco, shut down and filed for Chapter 7 bankruptcy last month, making its cards effectively worthless.
- Synergy briefly promised to honor cards through early February, then stopped redemptions in late January after a surge in customers trying to use their remaining value.
- Some Costco locations have chosen to refund customers while others have not, and the company hasn’t provided a clear public response.
Shoppers who bought Synergy World restaurant gift cards at Costco have discovered that their balances are now worthless after the San Diego-based card issuer abruptly shut down and entered Chapter 7 bankruptcy.
Synergy is a company that ran gift and loyalty card programs for hundreds of restaurants across the country, including San Diego-based spots like Havana Grill, Bencotto and The Godfather. Once Synergy shut down last month, its network stopped processing redemptions, instantly negating the value on its cards, according to ABC 10 News.
Although Costco sold the cards and branded them for use at participating restaurants, Synergy was the actual issuer and program manager, not Costco or the restaurants themselves, per Fox Business. Customers could purchase Synergy gift cards at Costcos in California, Arizona, New Mexico, Nevada, Colorado and Texas.
Synergy initially announced that it would honor existing gift cards through early February, but then reversed course and halted redemptions in late January due to a surge in customers trying to use their remaining balances. It is unclear how much unredeemed value is trapped on these cards. Costco sold the gift cards “right up until Christmas,” a customer told CBS 8.
Bankrate analyst Ted Rossman told the San Diego Union-Tribune that a gift card functions as “a promise for future goods and services.”
“When the company behind that promise fails, gift card holders are typically unsecured creditors and end up near the back of the line,” Rossman told the outlet.
A key legal distinction is that Costco was a reseller of a third-party product rather than the issuer guaranteeing the underlying value. Synergy’s bankruptcy doesn’t automatically obligate Costco or the restaurants to refund or honor the gift cards, per the San Diego Union-Tribune.
Inconsistent refunds and surprise at Synergy’s closure
Still, some customers are asking for their money back. According to Fox Business, some Costco locations have refunded Synergy gift cards as a customer-service gesture, while others have declined to do so.
Costco did not respond to Entrepreneur’s request for comment. It’s unclear whether any refunds reflect a formal policy or the discretion of individual stores.
Costco’s return policy states that “gift cards and ticket items are nonrefundable.”
A 2024 Bankrate report shows that 43% of Americans have at least one gift card that they haven’t used yet, with an average balance of $244. More than one in three Americans have lost money due to expired, lost or out-of-business gift cards, the report found.
Costco offered Synergy as a popular gift card option, and the company’s collapse took some businesses by surprise. One restaurant manager, David Buelna of Flavors of East Africa in Northern Park, California, expressed his shock to CBS 8.
“We get about three Synergy gift cards minimum a day, and so I thought they were doing well,” Buelna said.
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Key Takeaways
- Synergy World, which issued restaurant gift cards sold at Costco, shut down and filed for Chapter 7 bankruptcy last month, making its cards effectively worthless.
- Synergy briefly promised to honor cards through early February, then stopped redemptions in late January after a surge in customers trying to use their remaining value.
- Some Costco locations have chosen to refund customers while others have not, and the company hasn’t provided a clear public response.
Shoppers who bought Synergy World restaurant gift cards at Costco have discovered that their balances are now worthless after the San Diego-based card issuer abruptly shut down and entered Chapter 7 bankruptcy.
Synergy is a company that ran gift and loyalty card programs for hundreds of restaurants across the country, including San Diego-based spots like Havana Grill, Bencotto and The Godfather. Once Synergy shut down last month, its network stopped processing redemptions, instantly negating the value on its cards, according to ABC 10 News.
