Gift Card Consumer Protection Laws

Ever since Liz Pulliam Weston wrote about gift cards being the lazy way out, it’s been covered by other very capable bloggers ad infinitum. But what may not have been covered are the state laws that protect consumers when it comes to gift card rules. For example, did you know that in California you can’t have an expiration date or fee (excluding one special case)? The same no-expiration rule applies for many other states such as Connecticut and Hawaii. The Consumer Union has a complete list of state gift card laws as well as some other very useful resources.

California: No expiration dates and no fees, with one exception. Permits a $1 per month fee only when the card has a balance of $5 or less, the card has been unused for 24 months, and the card is reloadable. Covers gift cards usable at a single store or chain. Multiple-use gift cards are not covered.

Connecticut: No expiration dates. No inactivity fees.

Hawaii: No expiration within the first two years. No fees. Effective July 1, 2005.

Illinois: Before Jan. 1, 2005, cards which do not have an expiration fee do not escheat to the state. Starting Jan. 1. 2005, cards must also have no service fees in order to avoid escheat.

Iowa: No fees unless there is a written contract between the card issuer and the holder of the gift card.

Louisiana: No expiration dates shorter than five years. No service fees, except for a one-time handling fee of $1. Covers cards issued to be redeemed in goods or services provided by the card seller.

Maine: No expiration dates. No fees unless printed on the card, allowed by written contract with the card owner, and not unconscionable.

Massachusetts: No expiration for the first seven years. Attorney General has stated that inactivity fees violate the state’s rule against expiration within the first seven years.

Maryland: No expiration for the first four years. No fees for the first four years. Fees that do apply after the first four years must be disclosed on the certificate or card, attached sticker, or envelope, and may not be changed except to benefit the consumer. Does not apply to cards processed through a national debit or credit card service that are usable at multiple unaffiliated sellers of goods or services. Effective July 1, 2006.

New Hampshire: For gift cards over $100, no expiration earlier than the date the funds escheat to the state. For gift cards of $100 or less, no expiration dates. No fees on cards of any amount.

New Jersey: Cards are “valid until presented.” All other restrictions must be conspicuously printed on the card. Covers card issued by retail merchandise establishments.

New York: No monthly service fees before 13th month of dormancy.

Nevada: NO fees for the first 12 months. After 12 months, fees may not exceed $1 per month. Covers gift cards usable at a single store or chain. Multiple use cards are not covered.

Rhode Island: No expiration dates. No monthly or annual service or maintenance fees.

South Caroline: No expiration within the first year. Fees permitted but must be disclosed on certificate, envelope, covering, or receipt.

Tennessee: Card issuer is exempt from turning unused funds over to the state if the card has no expiration date and no dormancy fees.

Vermont: No expiration within the first three years. No fees, except a licensed money transmitter, financial institution or credit union may charge a one time issuance fee the smaller of $10 or 10%. Effective: July 1, 2005.

Washington: Prohibits expiration dates and all fees, with one exception. Permits a $1 per month fee only when the card has a balance of $5 or less, the card has been unused for 24 months, the card is reloadable, and the fee is disclosed on the card. Does not apply to gift cards issued by a financial institution or its operating subsidiary if usable at multiple unaffiliated sellers of goods or services.

This is a summary of key features of many state gift card laws. Consumers Union does not give legal advice. Gift card laws are changing rapidly. Please consult the laws of your state for more information.

Prepared by:
Gail Hillebrand
Consumers Union of U.S., Inc.
West Coast Office
1535 Mission St.
San Francisco CA 94103
Updated: June 24, 2005