As Mainers begin to think about this coming holiday shopping season, Maine State Treasurer Neria Douglass has some advice if you are considering gift cards as an option. If national trends are any indication, Mainers are expected to spend $50 million on gift cards this year. Gift cards are a convenient way to give presents to friends and loved ones, but downsides do exist.

“While gift cards are a popular and easy way to give, they are not without pitfalls,” Treasurer Douglass warns. “Buyers should purchase from trusted retailers only and read the terms and conditions carefully. Be sure to pass on the important information to the recipient, too. The best advice I can give about gift cards is: if you have them, use them.”

According to the Tower Group, $1 Billion will be lost in unused gift cards this year. That amounts to roughly $5 million that Mainers could potentially be leaving behind this holiday season. Gift cards often result in “breakage” of up to 10% for the retailer. That means for every $100 sold, only $90 is actually redeemed.

Here are some tips to keep in mind when dealing with gift cards:

Tips for purchasers:

Check for fees—some cards have costly fees to load or reload funds to the card.

If considering an online auction site for purchase, do your homework. Some are known for counterfeit cards or sell cards that have been obtained fraudulently.

Do not buy a gift card from a retailer in distress, i.e. on the verge of bankruptcy.

Inspect the card before you buy it and forgo damaged or altered cards.

Tips for recipients:

Guard gift cards like cash and use them quickly.

Under $5 left? Ask for a cash refund during your transaction. Maine retailers are required by law* to comply.

Register your gift card with the retailer in case of loss or failure to redeem.

Keep the receipt and make a note of the card’s ID number.

Maine has strict laws covering gift cards. Gift cards (with some exceptions) sold in Maine are not allowed to expire. Buyers should be aware that pre-funded bank cards are NOT gift cards and do not have the same protections under Maine law as gift cards. A card sold by a bank with a VISA/Mastercard/American Express logo is a pre-funded bank card, not a gift card, even if it is labeled as a gift card.