Law Review: Expiration dates for gift cards are unlawful | SierraSun.com
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Law Review: Expiration dates for gift cards are unlawful

Jim Porter
Submitted to the Sierra Sun
Jim Porter

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 Jan. 1, 1997, 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 January 1, 1997, 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 California gift certificate violations. In almost every case, the business agreed to change its practice and eliminate expiration dates.

DORMANCY FEES

Some merchants have added what are called “dormancy fees” to the certificates that allow the business to charge a dormancy fee after a certain period of time. Those fees are severely restricted in California.

THREE EXCEPTIONS

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.

PROMOTIONAL EXCEPTION

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 in 30 days, that’s within the law.

EMPLOYER/CHARITY EXEMPTION

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 fundraising 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.

FOOD EXCEPTION

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 and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada. Jim’s practice areas include: real estate, development, construction, business, HOAs, contracts, personal injury, accidents, mediation and other transactional matters. He may be reached at porter@portersimon.com or http://www.portersimon.com


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