Expiration dates impermissible on gift certificates
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. California is one of only five states that regulates expiration dates.No expiration dateWhen you buy a gift certificate after Jan. 1, 1998 for books at Barnes & Noble, 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 Jan. 1, 1998 that someone purchased for you that by its terms expired e.g., on Dec. 31, 2002, it is still valid.Several dozen lawsuits have been filed against national retailers for gift certificate violations. In almost every case, the business agreed to change its practice and eliminate expiration dates.Recapture feesA few clever merchants have added what are called “recapture fees” to the certificates that allow the business to accrue interest, e.g., $1.50 a month, after a certain period of time.Of course, after awhile the card has no value.Those fees are probably illegal in California. We will find out when these cases make it through the court system.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 daysPromotional exceptionCertificates 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 in 30 days, that’s within the law.Employer/charity exceptionExpiration 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.Gift certificates purchased for a volume discount for reuse by a charity for fund-raising may contain an expiration date.Food exceptionThe third exception is gift certificates that may be issued for a 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, with offices in Truckee, South Lake Tahoe and Reno.He is a mediator and was the Governor’s appointee to the Bipartisan McPherson Commission and the California Fair Political Practices Commission. He may be reached at email@example.com or at the firm’s Web site, http://www.portersimon.com
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