Costco shoppers just learned the hard way that a “discount deal” can turn into a worthless promise overnight when a third-party gift-card company pulls the plug in bankruptcy.
Quick Take
- Synergy restaurant gift cards sold at Costco became unredeemable after Synergy World shut down during a Chapter 7 bankruptcy.
- Synergy abruptly ended redemptions on January 30, even after previously signaling that cards could be used through January 31.
- Because the cards were third-party (issuer-run), cardholders are treated as unsecured creditors with limited leverage in bankruptcy.
- Refunds have been inconsistent across Costco locations, highlighting the difference between the store that sold the card and the company that controls it.
- The incident is a reminder that federal gift-card rules don’t guarantee protection when an issuer goes under.
Synergy’s shutdown turned “restaurant network” cards into dead plastic
Synergy World Inc., the issuer behind certain restaurant gift cards sold at Costco, discontinued its program after filing for Chapter 7 bankruptcy in late January 2026. Shoppers who expected the cards to work at participating restaurants instead found balances effectively stranded once redemptions stopped.
Reports indicate the cards were marketed as usable across a broad restaurant network, but the system depended on Synergy’s continuing operations—an overlooked risk when a trusted retailer is the point of sale.
Synergy’s timeline matters because it explains why so many families got caught flat-footed. After announcing a shutdown, the company initially indicated cards would be honored through January 31.
On January 28, Synergy posted that January 31 would be the final redemption date. Then, on January 30, Synergy ended the program immediately, stating a surge in redemptions forced an early halt. Restaurants stopped accepting the cards once the network was discontinued.
Some gift cards sold at Costco are now worthless https://t.co/SimQytX0xz
— FOX Business (@FoxBusiness) February 10, 2026
Chapter 7 bankruptcy leaves cardholders at the back of the line
Chapter 7 is liquidation, not reorganization, and that distinction shapes what consumers can realistically expect. Analysts quoted in coverage describe gift cards as a promise for future goods or services, not a protected deposit.
In bankruptcy, holders generally become unsecured creditors, meaning they stand behind secured lenders and other priority claims. Bankruptcy law sets clear payment priorities, and unsecured claims often recover little—or nothing—after assets are sold and higher-ranking obligations are addressed.
That structure helps explain why “use it fast” is common advice whenever a retailer or gift-card manager enters bankruptcy. Prior cases in major retail collapses show gift cards sometimes get honored briefly, then cut off as the case progresses and liquidation realities set in.
In this Synergy situation, the early shutdown of redemptions accelerated the pain. Coverage also notes that federal rules limiting fees and expirations don’t create bankruptcy protection, leaving consumers exposed when the issuer disappears.
Costco’s brand trust collided with a third-party issuer reality
Costco is the storefront where many shoppers bought the cards, but reports emphasize that Costco was not the issuer controlling redemption. That separation is the heart of the consumer frustration: people reasonably assume that if a product is sold by a major retailer, the retailer stands behind it.
In practice, third-party gift cards can function more like a reseller arrangement. Coverage indicates Costco declined comment publicly, while some store locations reportedly offered refunds and others did not.
The inconsistent refund experience is a practical warning for consumers who prefer clear accountability and straightforward transactions. When the seller and the issuer are different entities, customer service can become a ping-pong match—especially after bankruptcy lawyers get involved.
Reports also describe a surge in attempted redemptions at restaurants—some citing dramatic spikes—as customers rushed to use balances after hearing the issuer might shut down. That scramble underscores how quickly these situations move once news breaks.
What consumers can do now—and how to avoid the trap next time
Cardholders facing nonworking Synergy cards have limited options described in coverage: attempt a refund through the retailer where purchased, or file an unsecured claim in the bankruptcy process if eligible.
The value of that claim may be uncertain until filings are public and the court process plays out, and Chapter 7 outcomes for unsecured creditors can be bleak. For future purchases, the clearest risk reduction is choosing retailer-issued cards or using third-party cards promptly.
For a conservative audience that’s tired of being told “the system works,” this story lands as a real-world reminder that fine print and corporate structures matter more than marketing. The takeaway isn’t panic; it’s prudence.
Big brands can sell products they don’t control, and federal rules won’t always rescue consumers when a company collapses. If you buy gift cards as part of budgeting or family gifting, treat third-party cards like perishable goods: buy with a plan and redeem quickly.
Sources:
Some gift cards sold at Costco are now worthless
Customers Stuck With Worthless Gift Cards After Company Goes Bankrupt
Costco Has a Gift Card Problem as Key Partner Goes Bankrupt
Customers Stuck With Worthless Gift Cards After Company Goes Bankrupt
