What You Need to Know About Gift Cards and the Law

Gift cards are the quintessential easy gift idea.
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Everybody uses them, and they avoid questions like “Will this fit her? ” or “Will he or she like this? ” Gift cards and gift certificates are available from a number of stores, ranging from the mundane such as grocery stores and drug stores to more specialized businesses like spas and travel agencies. No matter where you purchase or receive a card from, however , it is important to protect yourself as a customer and be familiar with your rights surrounding gift card use. After all, they are used as form of currency plus ought to be treated as frugally as you would treat cash.

What can I do with a gift card I avoid want?

There are a lot of options for putting gift cards you don’t want to good make use of. There are websites that exist for the sole purpose of buying and selling gift cards. Present Card Granny, for example , will buy your card for 60%-80% of its value. You can also sell your card on the website like Craigslist or eBay. Other websites like Gift Credit card Swapping allow you to trade your gift card for one you’ll actually make use of.

If you’re feeling charitable, many nonprofits, including local schools and church buildings, will accept gift cards as donations. Gift cards are also great for re-gifting. There’s no reason to let any kind of gift card sit around and be forgotten!

Can my gift credit card expire? Can I lose the balance on my gift card?

The short answer: It depends on what state you live in.

The long answer: This will depend on what state you live in, as well as the extent to which your state is complying with federal law.

In 2009, the particular Credit Card Accountability Responsibility and Disclosure (CARD) Act [gpo.gov/fdsys/pkg/PLAW-111publ24/pdf/PLAW-111publ24.pdf] passed into federal law. The particular act covers a lot of ground encircling the protection of credit cardholders, but it also created some federal standards for gift card issuers that are designed to protect consumers. These include requiring that will cards, with a few exceptions, run out no less than five years after issuance and that dormancy fees can only end up being charged after one year of inactivity and only if these fees are fully disclosed to consumers. Based on the CARD Act, stores are permitted to begin charging dormancy fees — meaning, a charge to keep the active when it has not been used following a certain amount of time – after 12 months of inactivity, and no more than one charge per month. Eventually, these charges might deplete the value of the card. This is an essential way stores and major card issuers like American Express make money. However , some states have introduced extra, and sometimes contradictory, legislation surrounding gift card law.

For example , New York law allows stores to begin getting monthly dormancy fees after only one year of inactivity. It is also legal for stores to charge a replacement fee for lost cards, and they do not require stores to give cash back for small balances on cards. Additionally , after five years cards are deemed “abandoned” and the balance of the card is forfeited towards the state. Other states, like New Jersey, establish abandonment after as little as 2 yrs of inactivity. (In New Jersey’s case, this policy has been deemed unconstitutional, so the state remains within flux between enforcing the overturned state standard and the federal standard. ) Such provisions, which remove the profit for card sellers that comes with unused cards, have caused main issuers like American Express to out of grocery and convenience stores in some states.

For comparison, Ca grants gift card users with protection beyond the federal regular. Cards are never allowed to expire, even with five years, and dormancy fees can only be charged after 2 yrs of inactivity and only if the stability on the card is less than $5.

A good resource for finding the specific laws in your state can be found here. Since not all card issuers or states have been in compliance with the federal law, consumers should be conscientious about reading the terms of the card. Generally, it’s smart to try to spend cards as soon as possible to prevent forgetting about them, and to use the full balance of the card.

What if there’s only a little money left on my card?

You may be able to make your balance in cash. Under the CARD Act, most businesses are required to supply cash for the remaining balance on a card if the balance is less than $5. (In some states, this particular minimum value is higher. ) Of course , businesses often fail to teach their front-of-the-line staff on this legislation, so you may need to escalate through the rates to find someone actually informed from the law.

What should I know about on the internet gift cards?

Online “gift certificate” sites that offer deals like Groupon and LivingSocial fall into a relatively gray area of the law. Generally, they may be treated as coupons rather than gift cards, meaning they are able to generally arranged their own terms when it comes to expiration schedules and redemption policies. Groupon, for example , requires that stores honor the worth a customer paid for a deal following the deal has expired, but just as a store credit.

Virtual credit cards, such as the popular Amazon or i-tunes cards that are often sent through email, do not usually expire. Sometimes they can be redeemed only online and not at brick-and-mortar stores, so look at the terms of the card carefully. Otherwise, they may be subject to the same laws as concrete cards; for example , Amazon includes the required language to indicate that cash refunds are only available where “required by applicable state law, ” even though it does not give information on how to go about claiming small balances in money.