Federal Gift Card Laws
Thanks to a recently enacted Federal law, gift cards are more consumer friendly than they have ever been. In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act. The CARD Act covers store gift cards and pre-paid general use cards. This law was fully implemented in January 2011 (after a delay to give companies time to implement the changes).
Section 401 (c)(2) of the CARD Act states “A gift certificate, store gift card or general-use prepaid card may contain an expiration date if--(A) the expiration date is not earlier than five years after the date on which the gift certificate was issued, or the date on which card funds were last loaded to a store gift card or general-use prepaid card; and B) the terms of expiration are clearly and conspicuously stated.”
In other words, gift cards, like those from your favorite store, cannot expire for five years. And reloadable cards? The five-year window starts over every time you reload the card. Additional state laws address inactivity fees, disclosure requirements and other protections, providing an additional layer of consumer protection.
State Gift Card Laws
In addition to the CARD Act, most states have enacted laws to further protect the consumer. Many of these laws expand the federal protections by including gift certificates and gift cards that are not reloadable and can only be used at one location. Virtual cards, online gift certificates and other electronic cards are included in the laws of many states. These laws vary in scope and worth, with some states offering no protections, such as Alabama, Alaska, West Virginia, Wisconsin and Wyoming, while other states are offer higher than average protection, such as California, Florida, Maine and Washington.
The following state laws apply to gift certificates and store-branded gift cards that are not otherwise covered by the CARD Act, except where noted.
Keep in mind that the CARD Act sets the minimum requirements for store and general use prepaid cards. State laws cover items such as gift cards and gift certificates. For example, if a state law allows for a two-year expiration date and requires the expiration date in 10 point type, a card covered by the federal law will have a five-year expiration date, but that date must be on the card and in 10 point type, per the state law.
Types of Gift Cards Covered By Consumer Protection Laws
These can be paper or electronic, and are generally used only at one outlet. Additional value cannot be added. Traditional gift certificates are limited to particular item(s) or service.
Store Gift Card
These are store-branded cards (such as Target and Wal-Mart cards) that can be used at multiple locations. The cards are reloadable.
General-Use Prepaid Card:
These are pre-paid general use gift cards (like as Visa, MasterCard, Discover or American Express gift cards) that are marketed as gift cards. These cards are reloadable.
Gift Card Questions and Answers
When Will My Gift Card Expire?
Gift cards cannot expire for five years after purchase or five years after additional funds are added, whichever is later. Some states, however, have longer expiration dates. Check your states section to find out more.
Will Fees Be Charged If The Card Is Not Used Right Away?
Inactivity fees are not allowed, as long as the card was used within the last 12 months. If the card is not used for 12 or more months, a small monthly fee can be charged. This fee can only be charged once per month.
Does The Federal Law Include My CVS Rewards Card Or Other Loyalty Card?
The CARD Act doesn't include store promotional, loyalty or rewards cards, cards purchase over the telephone, paper gift cards or paper gift certificates. This includes popular pharmacy and grocery reward cards.
Does My State Have Better Laws?
Many states have stronger laws that include expiration dates, fees and disclosures, and cover paper gift certificates and gift cards. Visit your state's page to find out what additional protections you may have.
Gift Cards Use Getting Higher Every Year
It's been said that gift cards make the perfect gift for any occasion, especially when you aren't sure what gift to buy. Consumers agree. In fact, according to the Tower Group, as of 2012, U.S. consumers spent more than $110 billion on gift cards. These include store cards for major retailers such as Target and Wal-Mart, and prepaid general use gift cards branded as Visa, MasterCard, Discover or American Express cards.