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Review Your State’s Gift Card Rules

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 [3]. 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 [4] because you may be able to use those laws to your advantage against retailers who may be unwittingly violating the law.

(Photo: steventom [5])