Gift Card Laws & Regulations Guide

Federal Gift Card Regulations

Gift cards in the United States are primarily regulated by federal law through the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) of 2009. This landmark legislation established comprehensive consumer protections for gift card users.

The Credit CARD Act of 2009 - Key Provisions

The federal law addresses several critical aspects of gift card usage:

1. Expiration Date Requirements

Five-Year Minimum Validity:

Gift cards must remain valid for at least five years from the date of purchase
For reloadable cards, each reload extends the expiration by five years from the reload date
This applies to both the card itself and the underlying funds
Expiration dates must be clearly disclosed at the time of purchase

What this means for consumers:

You have ample time to use your gift card value
Cards received as gifts won't expire quickly
Retailers cannot implement short-term expiration policies to forfeit unused balances

Exceptions:

Promotional gift cards distributed without direct monetary payment (must be clearly labeled as promotional)
Certain prepaid telephone cards
Reloadable general-purpose prepaid cards under specific conditions
Loyalty, award, or promotional programs under certain circumstances

2. Fee Restrictions and Disclosures

Dormancy and Inactivity Fees:

Cannot be charged until the card has been inactive for at least 12 consecutive months
Only one fee per month may be assessed
The fee amount must be disclosed clearly before purchase
Terms regarding when fees begin must be stated prominently

Required Fee Disclosures:

All fees must be clearly disclosed on the card, packaging, or associated materials
Disclosure must occur before purchase
Information must be easy to read and understand
Cannot be hidden in fine print that requires magnification

Types of fees regulated:

Dormancy or inactivity fees
Service fees
Account maintenance fees
Balance inquiry fees (with specific disclosure requirements)

3. Disclosure Requirements

Mandatory Information on Card or Packaging:

Expiration dates (if any)
All applicable fees
Fee trigger dates (when fees begin to accrue)
Terms and conditions in clear language
Customer service contact information

Format Requirements:

Disclosures must be clear and conspicuous
Plain language requirement (no overly technical jargon)
Readable type size
Accessible placement on packaging

State-Specific Regulations

While federal law sets baseline protections, many states have enacted additional consumer protection laws for gift cards. State laws may be more restrictive than federal law, and in such cases, the stricter state law applies.

Common State-Level Protections

Complete Prohibition of Expiration Dates:

Several states prohibit any expiration dates on gift cards regardless of federal five-year minimum
States with such laws include: California, Connecticut, Maine, Massachusetts, Montana, New Hampshire, Oregon, Rhode Island, Utah, Vermont, and Washington
In these states, gift card balances never expire

Prohibition of All Fees:

Some states ban dormancy fees, service fees, and inactivity fees entirely
California: No dormancy or service fees allowed after purchase
Maine: Prohibits fees of any kind on gift cards
Washington: Bans post-sale fees with limited exceptions

Cash Back Requirements:

California: Requires cash redemption for cards with balances under ten dollars
Colorado: Mandates cash back for balances under five dollars
Maine: Requires cash redemption for balances under five dollars
Massachusetts: Allows cash redemption for balances under ten percent of original value or less than ten dollars
Montana: Requires cash back for remaining balances under five dollars
Oregon: Mandates cash redemption for balances under five dollars
Rhode Island: Requires cash back for balances under one dollar
Vermont: Allows cash redemption for balances under one dollar
Washington: Requires cash redemption for balances under five dollars

Replacement Card Policies:

Some states require issuers to replace lost or stolen cards if certain conditions are met
May require original purchase receipt
Verification of card number may be necessary
Replacement fees may be limited or prohibited

Escheat Laws (Unclaimed Property):

Regulate what happens to unused gift card balances after extended periods
Some states require dormant gift card funds to be turned over to the state
Consumers can typically claim these funds through state unclaimed property programs
Time periods vary by state, typically ranging from three to five years

Checking Your State's Laws

To find specific regulations in your state:

Contact your state Attorney General's office
Check your state's consumer protection agency website
Review your state's unclaimed property office information
Consult state-specific consumer advocacy organizations

Retailer Bankruptcy and Gift Card Protections

Federal and State Protections

When a gift card issuer declares bankruptcy, the treatment of outstanding gift cards depends on several factors:

General Bankruptcy Rules:

Gift card holders are typically considered unsecured creditors
Gift cards may lose value or become worthless in bankruptcy
Recovery depends on bankruptcy proceedings and available assets
State laws may provide additional protections

State-Specific Bankruptcy Protections:

Some states require issuers to maintain reserves for outstanding gift card liabilities
California requires retailers to either honor cards during bankruptcy proceedings or obtain surety bonds
Connecticut has specific trust fund requirements for large gift card issuers

What consumers can do:

File a claim in bankruptcy proceedings
Check if card was purchased with credit card for potential chargeback options
Monitor bankruptcy proceedings for gift card treatment decisions
Use gift cards relatively soon after purchase to minimize risk

Electronic Fund Transfer Act (EFTA) Considerations

Applicability to Gift Cards

The Electronic Fund Transfer Act provides consumer protections for electronic transactions. Its application to gift cards depends on card type:

Generally Covered Under EFTA:

General-purpose reloadable prepaid cards
Payroll cards
Government benefit cards

Generally NOT Covered:

Store gift cards (retailer-specific)
Traditional gift certificates
Promotional cards from loyalty programs

Protections Under EFTA (when applicable):

Error resolution procedures
Limited liability for unauthorized transactions
Disclosure requirements
Access to transaction history

Consumer Rights and Enforcement

Your Rights as a Gift Card Consumer

Right to Clear Information:

Receive clear disclosure of all terms, fees, and expiration dates before purchase
Access to customer service information
Ability to check balance without fees (with some limitations)

Right to Fair Treatment:

Five-year minimum validity under federal law
Protection from excessive fees
Fair fee disclosure
State-specific additional protections

Right to File Complaints:

Report violations to appropriate regulatory authorities
Seek redress through consumer protection channels
Participate in class action lawsuits for widespread violations

Where to Report Violations

Federal Level:

Consumer Financial Protection Bureau (CFPB): Handles complaints about financial products including certain gift cards
Federal Trade Commission (FTC): Addresses unfair or deceptive business practices

State Level:

State Attorney General: Enforces state consumer protection laws
State Consumer Protection Office: Investigates consumer complaints
State Banking Regulator: May oversee certain prepaid card products

Industry Self-Regulation:

Better Business Bureau (BBB): Facilitates dispute resolution
Industry Trade Associations: May have complaint procedures

Special Categories and Exceptions

Cards Not Covered by Standard Regulations

1. Promotional Gift Cards

Cards given as part of promotions without direct purchase may have different rules
Must be clearly identified as promotional
May have shorter expiration periods if properly disclosed
Still subject to state-specific regulations

2. Loyalty and Rewards Program Cards

May not be covered under Credit CARD Act if part of customer loyalty program
Terms set by program rules
State laws may provide some protections
Program-specific dispute resolution procedures typically apply

3. Phone Cards

Prepaid telephone calling cards have separate regulatory framework
Different disclosure requirements
FCC has specific rules for these products

4. Transit Cards

Public transportation payment cards may have different rules
Often regulated by transit authorities rather than consumer financial protection agencies
Refund policies vary by transit system

Practical Implications for Consumers

How to Protect Yourself

Before Purchasing:

Read all terms and conditions carefully
Note any expiration dates and fee structures
Verify the card is from an authorized seller
Check your state's specific laws for additional protections
Consider retailer's financial stability for large amounts

After Purchasing:

Keep purchase receipts in safe place
Record card numbers separately from physical cards
Register cards when possible for loss protection
Use cards within reasonable timeframe to minimize risk
Monitor balances regularly

If Problems Arise:

Contact card issuer's customer service first
Document all communications
File complaints with appropriate regulatory agencies
Consider disputing charge with credit card company if applicable
Seek legal advice for substantial amounts

Important Disclaimers

Educational Information Only: This content provides general educational information about gift card regulations and consumer protections. It is not legal advice and should not be relied upon as such.

Jurisdiction Variations: Laws vary significantly by state and locality. Always verify the specific laws applicable in your jurisdiction.

Changing Regulations: Gift card regulations evolve over time. Legislation may change, and new interpretations may emerge. For current legal advice, consult with a qualified attorney.

No Attorney-Client Relationship: Reading this information does not create an attorney-client relationship. For specific legal questions, contact a licensed attorney in your state.

Gift Card Laws and Regulations