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Review Your State’s Gift Card Rules
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It’s estimated that people purchased $87 billion in gift cards this holiday season, according to The Tower Group in a recent CNN Money article. Of all those cards, Marketing Workshop, another research firm, it’s estimated that 40% of recipients don’t use up all of their cards’ value, leaving an average of $2.30 on the card.
While I’m not a fan of gift cards, I’m an even lesser fan of the insidious tricks companies will play to earn money off your money. They have monthly dormancy fees and expiration dates, all designed to let the money slowly disappear into the abyss. New Federal laws are bringing some uniformity to the fees, such as prohibiting dormancy fees until a year has passed, much like they did to the credit card industry many years ago. While these new rules are not yet in effect, they may be weaker than your state’s rules.
For example, in Maryland, retailers cannot sell gift cards or gift certificates that expire within four years from the date of purchase. Any fees must be disclosed. So while there is no requirement that a dormancy fee must wait a year to kick in, the four year expiration helps consumers protect their gift card balances. If you think four years is a long time, in Massachusetts it’s seven years!
So check your state’s laws on gift cards and gift certificates because you may be able to use those laws to your advantage against retailers who may be unwittingly violating the law.
(Photo: steventom)
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In California, it is illegal for gift cards to expire. I can’t remember when this law went into effect, but it has been years. I still run into people who don’t know this, and some people will automatically dump a gift card they’ve had for a long time because they assume it has expired! I like to use every freakin’ penny on any gift card I’ve got.
Thanks for the link to the state by state gift card laws. I was under the impression that gift cards in IL couldn’t expire but it turns out that they can but not within 5 years of issuance. Further, there can’t be any inactivity fees which is great, but I still agree that gift cards are stupid…why not give cash that never expires?
I found a $50 restaurant gift card from about four years ago that never got used. Thankfully,I’m in Massachusetts! Maybe I’ll finally get around to using it in 2010
I side you with in regards that a lot of gift cards essentially are ways for companies to trick you out of your money. They will advertise them as being as good as cash, but hide dormancy fees on the back of the card.
On the back of the Vanilla Visa in my wallet, which I need to finish off, it states “A Service Fee of $2.50 per month beginning on the seventh month of activation will be applied to the remaining balance except where prohibited by law. Cute how they call it a “service fee”.
Here in Ohio, a gift card has to be good for two years free of fees or expiration. After two years, it seems to be fair game. I’ve never been hit with a gift card fee though, and I never buy a gift card with an expiration date.
yay no gift cards for me this year!
Definition of Gift cards: I was too busy to even put any thought into considering anything you might like so go out and buy it yourself.
I saw a lot of gift cards get traded this year in my family. Granted we got a lot of teenage boys who really only want video games. It is hard for grandma to keep up with the latest game. What they wanted in August, probably isn’t what they want in December.
There seems to be some ad-version to cash, just give cash all these problems go away.
made full use of the macy’s gift cards this year..thanks to me flying united for a long time!
We give gift cards often, and I wasn’t aware there are individual state laws for them. If fact we often buy them for out of state gifts!
Thanks for the heads up, we’ll have to look into this more closely.
i hate these things and told my gf to never allow anyone to get me one.
and when multiple people in her family give them to her every year i tell her to use it as soon as she can, but for something she would buy anyway obv, since they are the devil.
Last night we got our HHGregg 69.99 delivery rebate in the mail and we also had to go grocery shopping since we have been out of town the last few weeks with Weddings and the Holidays. $165 at Wal-Mart turned into 95.01 quickly. I know people fuss about exp dates, but I’m lucky if I can keep mine for more then a few weeks. I always try to substitute it for regular spending.
I’m confused again. I thought it doesn’t matter where you live; but it matters alot where your gift card was purchased or obtained!?! If my state has the worst gift card laws, then I might as well buy as many gift cards as I can use or want when on vacation in a consumer-friendly, gift card law state. Beantown sounds like a good vacation spot and place to get those 7 year periods. Of course there are several stores that advertise and post on cards with no expiration dates at all. Another useful information site is http://www.consumersunion.org/pub/core_financial_services/003889.html
Can’t the merchants simply play a semantic game to get around the new rules?
Eg. This isn’t a “gift card”, this is a “credit voucher”.
Under each statute there is a definition of a gift card outlined in order to prevent merchants from doing this.