California Gift Certificate & Expiration Law
Gift certificates are a way to give a gift to a friend or family member when you do not know what to give them. The state of California protects consumers from purchasing gift certificates, which expire or charge fees if not used. Consumers should understand the gift certificate laws and exceptions to these laws.
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Definition
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According to the TowerGroup, in 2009 consumers spent approximately $87 billion on gift cards. A gift certificate or card is considered the same under California law. The law pertains to gift certificates sold after January 1, 2004 and provides additional protections beyond federal laws governing bank gift certificates or cards.
Service Fees
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Service fees are prohibited on most gift certificates. Fees for not using a card are restricted. Charging a fee is allowed under specific circumstances, such as, when the value of the card is under $5 and the fee is less than $1 a month. In addition, cards not used for 24 months or ones which are not re-loadable are subject to fees. In addition, certificates allowed to charge fees must print the amounts on the front or back of the certificate or card. Dormancy fees are allowed on gift certificates for multiple stores not associated with each other. Retailers who issue gift certificates with a redemption date and not an expiration date must give a refund to the purchaser if it is not used.
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Cash Redemption
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On January 1, 2008 the law regarding cash back with gift certificates went into effect. Retailers must give cash back when the value of a certificate is less than $10. A consumer can receive the cash value in the form of a check or currency.
Exceptions
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California law on gift certificates does not apply to all types. Prepaid cards, certificates through custom loyalty programs or ones which are sold below value for a fundraiser, are not covered. In addition, certificates with an expiration date of 30 days or less, or food certificates are not protected by the law.
Tips
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In the event a company files for bankruptcy, the value of the gift certificate can be zero. It is best to use a certificate as soon as possible to avoid not being able to redeem it. A new California law now forces a retailer to allow a consumer to use a gift certificate if it was purchased prior to the bankruptcy filing.
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References
- Photo Credit Gift Card image by chas53 from Fotolia.com
