The nationwide closure of every Joann fabric and craft store location has created significant frustration among loyal customers, particularly those holding gift cards now deemed worthless by the company. The retailer’s decision to stop accepting gift cards during its extended liquidation sales has sparked considerable backlash from shoppers who feel their money has been unfairly taken.
This policy announcement comes as the Ohio-based retailer begins the process of closing approximately 800 stores across the United States following its second Chapter 11 bankruptcy filing within a year. The abrupt change in gift card redemption policies has left many customers feeling betrayed by a brand they had long supported.
Customer reaction intensifies
Social media platforms have become forums for customer complaints as shoppers discover they can no longer redeem their gift cards despite ongoing liquidation sales. Many express particular frustration over what they perceive as inadequate notification regarding the policy change.
On the retailer’s March 3 Instagram post encouraging customers to take advantage of closing sales, numerous commenters voiced their disappointment. Several pointed out the fundamental unfairness of a business that collected money for gift cards now refusing to honor those same financial instruments during its extended closing period.
The frustration extends beyond social media, with some customers reporting significant financial losses. One shopper shared on X that they had missed their opportunity to use a $40 gift card before the redemption cutoff, effectively losing that money with no recourse for recovery.
Potential legal complications
The gift card situation becomes particularly complex in states with consumer protection laws specifically addressing gift card expiration. Maine residents have been especially vocal about their concerns due to state regulations that explicitly prohibit expiration dates on gift certificates.
Maine law specifically states that “a period of limitation may not be imposed on the owner’s right to redeem the gift obligation.” This clear legal language suggests the retailer’s blanket policy refusing all gift card redemptions may conflict with established consumer protection statutes in at least one state.
Similar legal questions could arise in other states with comparable consumer protection provisions. These potential conflicts highlight the complicated legal landscape retailers must navigate during bankruptcy proceedings, especially when those proceedings impact previously issued financial instruments like gift cards.
Bankruptcy background context
The current situation stems from Joann’s February Chapter 11 bankruptcy filing, which initially suggested only a portion of its locations would close. However, the company later announced every store nationwide would cease operations after an asset auction resulted in liquidation.
On February 22, retail liquidator GA Group partnered with Joann’s term lenders to win the bidding for the company’s remaining assets. This outcome differed substantially from the retailer’s apparent hope to maintain at least some physical locations through the restructuring process.
In a company statement, Joann leadership expressed that they had “made every possible effort to pursue a more favorable outcome that would keep the company in business.” Despite these efforts, the auction results led to the current liquidation process affecting all locations across the country.
Extended closing timeline
While the announcement of complete closure came as a surprise to many customers, the actual process of shuttering all locations will extend over a considerable period. Going-out-of-business sales officially began on February 15, though the company expects the full liquidation process to continue for several months.
The retailer has specified that “only inventory available on-site at those stores will be part of the closing sales.” This limitation means stock will not be replenished once depleted, creating a gradually diminishing shopping experience as the liquidation progresses.
This extended timeline has intensified customer frustration regarding gift cards, as many wonder why the cards cannot be accepted throughout the remaining months of operation. The contrast between ongoing sales and the refusal to honor gift cards represents a central point of contention for many disappointed shoppers.
Industry pattern emerges
Joann’s situation reflects broader trends affecting specialty retailers in recent years. The craft and fabric chain joins other specialty retailers that have faced similar financial challenges amid changing consumer habits and increased competition from both online platforms and big-box stores.
The gift card controversy mirrors situations that have occurred during other retail bankruptcies, where customers holding store credit or gift certificates often find themselves classified as unsecured creditors with limited recourse for recovering their funds.
Consumer advocates generally recommend using gift cards promptly upon receipt to avoid this precise scenario. However, such advice provides little comfort to current cardholders who intended to use their cards for specific future projects or who received them shortly before the bankruptcy announcement.
Customer communication challenges
Some customers have expressed particular frustration about what they perceive as inadequate communication regarding the gift card policy. Many learned about the redemption cutoff through social media or when attempting to use their cards in store, rather than through direct notification.
This communication gap has compounded the negative sentiment surrounding the closures. Shoppers who might have used their cards had they known about the impending deadline now find themselves with worthless plastic and limited options for recourse.
The situation highlights the challenges retailers face when communicating with customers during bankruptcy proceedings. While bankruptcy necessitates certain operational changes, effectively sharing this information with affected customers represents a significant challenge that can impact brand perception even during dissolution.
Broader retail implications
The Joann situation serves as a cautionary tale for both consumers and other retailers. For shoppers, it reinforces the inherent risk in holding gift cards for extended periods, particularly from retailers showing signs of financial distress.
For other retailers, the backlash demonstrates the importance of managing customer relationships even during difficult business transitions. How companies handle obligations like gift cards during bankruptcy can significantly impact public perception and potentially create lasting negative impressions that extend beyond the brand’s operational life.
Consumer advocates suggest the situation may prompt increased regulatory attention to gift card policies during retail bankruptcies. Some have called for strengthened protections that would require companies to honor gift cards throughout liquidation processes or provide alternative means of compensation.
Limited recourse options
Customers holding now-unusable gift cards have few options for recovering their value. In bankruptcy proceedings, gift card holders typically qualify as unsecured creditors, placing them low in the priority order for receiving compensation from remaining assets.
Some consumers may attempt to dispute gift card purchases made with credit cards, though success likely depends on the timing of the purchase and specific credit card company policies. Others may file claims as part of the bankruptcy proceedings, though such claims often result in minimal, if any, recovery.
The situation ultimately leaves many customers feeling they have experienced a form of financial loss with limited avenues for resolution. This sentiment has fueled the ongoing negative reaction across social media and other public forums as the retailer continues its months-long closing process.
