Law review: Expiration dates on gift certificates unlawful
Gift certificates are big business. Some studies show that up to one-half of Christmas gifts come in the form of gift cards or certificates.
Given the choice, would you rather have a gift certificate to your favorite store or Aunt Minnie’s imitation diamond-encased tie tack or Uncle Buck’s “one-of-a-kind” fluorescent floor lamp purchased through United Airlines in-flight magazine?
Well, here’s a little known secret about gift certificates. Don’t tell anyone, and certainly don’t let merchants know I tipped you off, but gift certificates purchased for California businesses do not expire. Civil Code section 1749.5. California is one of only a few states that regulate expiration dates.
No Expiration Date
When you buy a gift certificate after January 1, 1997 for books at Barnes & Noble, for example, or even locally, which I prefer you do, California law forbids an expiration date.
Let me say that again. Even if you still have an old gift certificate issued after January 1, 1997 that someone purchased for you that by its terms expired e.g., on December 31, 2020, it is still valid subject to the exceptions below.
Several dozen lawsuits have been filed against national retailers for California gift certificate violations. In almost every case, the business agreed to change its practice and eliminate expiration dates.
Some merchants have added what are called “dormancy fees” to the certificates that allow the business to charge a fee after a certain period of time. Those fees are severely restricted and generally not allowed in California.
There are three narrow exceptions for gift certificates purchased for use in California – where the certificate may include an expiration date of no less than 30 days.
Certificates that are “distributed by the issuer to a consumer pursuant to an awards, loyalty or promotional program without any money or other thing of value being given in exchange for the gift certificate by the consumer.” So, if you receive an unsolicited certificate in the mail that expires after 30 days, that’s within the law.
Expiration dates are permitted on gift certificates “that are sold below face value at a volume discount to employers or to non-profit and charitable organizations for fund raising purposes if the expiration date on that gift certificate is not more than 30 days after the date of sale.” I am not sure what a gift certificate “sold below face value at a volume discount to an employer is.” Something an employer gives away to employees, I suppose.
A gift certificate donated for fundraising may contain an expiration date (of no less than 30 days).
The third exception is gift certificates that may be issued for a perishable food product.
Under all three exceptions, the expiration date must appear in capital letters in at least 10-point font on the front of the gift certificate. Again, these restrictions apply only to gift certificates that have been purchased.
Jim Porter is an attorney with Porter Simon licensed in California, with offices in Truckee and Tahoe City, California, and Reno, Nevada. These are Jim’s personal opinions. Jim’s practice areas include: real estate, development, construction, business, HOA’s, contracts, personal injury, accidents, mediation and other transactional matters. He may be reached at firstname.lastname@example.org or http://www.portersimon.com. Like us on Facebook. ©2022
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