Purchasing gifts for others is no easy task. Gift shoppers can spend hours, days, or even weeks brainstorming the perfect gift for someone based on their interests, hobbies, or needs, often to no avail.
Gift cards are the solution. All busy or anxious gift shoppers know the benefits of gift cards. They provide an effortless and convenient way to wish someone a happy holiday or congratulate them on a special occasion. On top of that, recipients are glad to receive these gifts because it allows them to buy the items they truly want.
Despite the overwhelming popularity of gift cards, few California shoppers are aware of the laws regulating gift cards and protecting consumers. Let’s explore applicable gift card laws and trends to help you continue to be an efficient, informed, and protected consumer.
Looking for more legal guidance? Visit our homepage to learn more about how we can assist you, contact us for personalized advice, or explore our practice areas to see how we can protect your rights.
The Basic Rules
California gift card law is established by various statutes. These statutes provide that:
- Most gift cards sold by retail sellers cannot contain an expiration date or a service fee, including a fee for dormancy, or nonuse.
- Any gift card sold after January 1, 1997, is redeemable in cash for its cash value or subject to replacement with a new gift card at no cost to the purchaser or holder.
- As of January 1, 2008, any gift card with a cash value of less than $10 is redeemable in cash for its cash value.
- California laws setting these rules for gift cards cannot be waived.
Do gift cards expire in California?
The general answer is no. Expiration dates are prohibited in the state unless the card is part of a promotional offer and is provided at no cost to the consumer. In such cases, the expiration date must be clearly disclosed.
Is there such a thing as “California gift card refund law”?
California gift card law also covers scenarios where gift cards can be partially refunded in cash. As mentioned earlier, it mandates that any gift card with a balance of less than $10 is eligible for cash redemption, which means that the holder can request cash instead of continuing to use the card.
When it comes to California gift card law cash-out policies, the statutes support the consumer. Retailers must comply with cash-out requests for balances under $10 and provide a means for consumers to fully utilize their gift card value without being forced into unnecessary purchases.
What Does This Mean For Me As A Consumer?
All too often, gift card purchasers and holders use their gift card balance to purchase miscellaneous items valued below the total cash value of the gift card, leaving them with partial and essentially unusable balances.
The California State Legislature recognized this as a problem for consumers who are left with small values on their gift cards and who cannot buy anything in the store. This unspent money ultimately reverts to retailers who have already been paid the total cash value of the gift card. To avoid this inequitable result, the state legislature amended California law to provide a right to cash value redemption that was lacking in earlier versions of the law.
Specifically, California law, Civil Code section 1749.5(b)(2), provides that any gift card with a cash value of less than $10 is redeemable in cash for its value. In other words, if one has a gift card of any value under $10, even if that value is $9.99 or $0.01, they are entitled, by law, to receive this value in cash from the issuing retailer.
However, the same law section adds that if a gift card holder has a gift card with a balance greater than $10, and issued after January 1, 1997, the issuing retailer is given the option either to 1) redeem the gift card in cash for its cash value, or 2) provide a replacement gift card at no cost to the purchaser or holder. This means that gift card holders are not entitled to the cash value of the gift card, but rather, the issuing retailer is given the option either to grant the cash value or a replacement card.
The legal distinction between gift cards with a cash value above $10 and those with a value below $10 might seem strange to most. Courts have tried to explain this distinction.
A 2009 case, Marilao v. McDonald’s Corporation, was brought by a plaintiff on behalf of himself and all other customers who received McDonald’s gift cards not redeemable for cash. Notably, the plaintiff in this case did not claim that the gift card cash value was less than $10. In rejecting the claim, the court reasoned that unlike a gift card containing a balance of less than $10, the plaintiff’s gift card was not useless. He could continue to use the card to make more purchases at McDonald’s. Therefore, customers need to understand the difference between gift cards with different cash balances.
Cashing Out Gift Cards in California: Other Scenarios To Consider
Another important aspect of California’s gift card laws involves the right to cash out a gift card. While the standard rule is that gift cards with balances under $10 must be redeemable for cash, there are other scenarios in which consumers can request a cash refund.
For instance, if a business goes bankrupt or closes permanently, consumers may be entitled to a cash refund for the remaining balance on their gift cards. In these situations, acting quickly is advisable, as the window for claiming a refund can be limited.
Gift Card Expiration and Nonuse
A simpler point, but one that is just as important, is that gift cards generally cannot be subject to an expiration date and service fees associated with nonuse. It is not hard to imagine receiving or buying a gift card but failing to use it for months or even years. Gift card purchasers and holders can rest easy knowing this gift card will be ready whenever needed.
That being said, it is important to note that in limited and specific circumstances gift cards may contain an expiration date. If this is the case, the card must contain the expiration date in capital letters in at least 10-point type on the front of the card. This way, consumers can be on notice and utilize their gift cards accordingly.
Keep these simple but essential laws in mind next time you purchase a gift card. Remember, whether you’re concerned about expiration dates or redeeming that last few dollars, California’s gift card laws are designed to protect your rights as a consumer. Happy shopping!
Need further assistance? If you have questions or need legal support regarding consumer rights, contact us today to speak with our experienced team.
