Gift Card Consumer Rights

Understanding your legal protections and remedies

Overview of Gift Card Consumer Protections

Gift card regulations exist at both federal and state levels to protect consumers from unfair practices. Understanding these rights empowers you to make informed decisions and seek remedies when problems arise. This comprehensive guide explains your legal protections, how to exercise your rights, and where to seek help.

Federal Gift Card Protections

The Credit CARD Act of 2009

The Credit Card Accountability Responsibility and Disclosure Act, passed in 2009, includes significant gift card provisions that provide baseline protections across all states.

Five-Year Expiration Requirement

Your Right: Gift cards, gift certificates, and store cards cannot expire for at least five years from the date of purchase or the date when funds were last loaded onto the card.

What This Means:

The monetary value on your gift card remains valid for at least five years
Retailers cannot impose shorter expiration periods on the funds
If you reload or add money to a card, the five-year period restarts from that date
This applies even if the physical card itself expires sooner

Important Exceptions:

Promotional gift cards (given as part of rewards programs or promotions) may have different rules
Cards that can only be used for specific services with expiration dates (like phone cards)
Cards that are not marketed as gift cards but rather as loyalty or award cards

Fee Restrictions and Disclosures

Your Right: Gift card fees must be clearly disclosed and are subject to specific restrictions.

Protected Activities:

One-Year Dormancy Protection: Inactivity or service fees cannot be charged until after at least one year of non-use
Limited Fee Types: Only one fee can be charged per month, even if multiple fee types would otherwise apply
Clear Disclosure Required: All fees must be clearly disclosed on the card itself or packaging
Fee Amount Transparency: The exact fee amounts must be stated, not just that fees may apply

Prohibited Practices:

Charging purchase or activation fees on retailer-specific gift cards (though network-branded cards may have such fees)
Charging dormancy fees before 12 months of inactivity
Charging multiple fees in a single month
Imposing undisclosed fees

Disclosure Requirements

Your Right: To receive clear, prominent disclosure of all material terms.

Required Disclosures Include:

Expiration date of the card or underlying funds
All applicable fees, including amounts and conditions triggering them
Toll-free telephone number or website for customer service
Any restrictions on card use
Information about checking balances

State-Level Protections

States with Enhanced Protections

Many states provide protections that exceed federal requirements. Your state may offer additional rights.

States Prohibiting Gift Card Expiration

The following states generally prohibit expiration dates on gift cards entirely:

California: Gift cards cannot expire, and no fees can be charged
Connecticut: No expiration dates allowed on gift certificates
Maine: Gift cards cannot expire
Massachusetts: Gift certificates cannot expire for at least seven years
Montana: Expiration dates prohibited on gift certificates
New Hampshire: No expiration dates permitted
Oregon: Gift cards cannot expire
Rhode Island: No expiration allowed on gift certificates
Vermont: Expiration dates prohibited
Washington: Gift cards generally cannot expire

States Prohibiting or Restricting Fees

Several states ban certain types of fees on gift cards:

California: Prohibits all fees including dormancy, service, and administrative charges
Colorado: No service fees allowed; limited exemptions exist
Maine: Service charges and fees prohibited
Massachusetts: No dormancy or administrative fees
Washington: Dormancy and other fees generally prohibited

Cash Redemption for Small Balances

Some states require retailers to provide cash for small remaining balances:

California: Cash required for balances less than $10
Colorado: Cash redemption for balances under $5
Maine: Cash for balances less than $5
Massachusetts: Cash refund for balances under 10% of original value (up to $5)
Montana: Cash for balances under $5
Oregon: Cash redemption for balances less than $5
Rhode Island: Cash for balances under $1
Vermont: Cash required for balances less than $1
Washington: Cash for balances under $5

Verifying Your State's Laws

To find specific protections in your state:

Contact your state's Attorney General office
Visit your state's consumer protection division website
Check your state legislature's website for current statutes
Consult with local consumer advocacy organizations

Your Rights When Problems Occur

Defective or Non-Functioning Cards

Your Right: To receive a replacement or refund for defective gift cards.

Common Issues:

Card not activated despite purchase
Magnetic stripe or chip not reading
Card number or PIN unreadable due to printing error
Digital code not delivered or invalid
System shows zero balance despite no usage

Steps to Take:

Keep your purchase receipt as proof of transaction
Contact the gift card issuer's customer service immediately
Provide card number, purchase date, and problem description
Request specific remedy: replacement card or refund
Document all communications with dates, names, and outcomes
If refused, escalate to a supervisor or manager
Consider filing complaints with consumer protection agencies if unresolved

Lost or Stolen Gift Cards

Your Right: May vary based on issuer policy and whether you registered the card.

Best Practices:

Registered Cards: Many issuers replace registered cards for free or a small fee
Unregistered Cards: Replacement policies vary; proof of purchase may help
Immediate Action: Report loss immediately to minimize liability
Documentation: Provide card number, purchase receipt, and circumstances of loss

Important Note: Unlike credit cards, gift cards generally don't have federal protections against unauthorized use. Your protection depends on the issuer's policies and state laws.

Unauthorized Charges or Fraud

Your Right: To dispute fraudulent transactions, though protections are more limited than with credit cards.

If You're a Fraud Victim:

Report to the gift card issuer immediately
File a police report documenting the fraud
Contact the Federal Trade Commission at ftc.gov/complaint
Report to your state's consumer protection office
If purchased with a credit card, dispute the charge with your credit card company
Check if your state has specific fraud protections for gift cards

Retailer Bankruptcy or Closure

Your Right: Limited protections exist when retailers go out of business.

What Typically Happens:

Gift card obligations may be treated as unsecured debt in bankruptcy
Cardholders become general creditors with low priority
Recovery of full value is unlikely in liquidation scenarios
Some states have special funds for certain types of consumer claims

Protective Measures:

Use gift cards promptly rather than holding long-term
Monitor news about retailer financial health
Consider purchasing from financially stable companies
File claims quickly when bankruptcy is announced

Exercising Your Rights

When Retailers Violate Regulations

Your Right: To file complaints and seek enforcement of gift card laws.

Step 1: Direct Resolution Attempt

Contact customer service with specific regulatory reference
Cite applicable federal law (CARD Act) or state statute
Request supervisor or compliance department if necessary
Document all attempts at resolution

Step 2: Formal Complaints

If direct resolution fails, file complaints with:

Federal Agencies:

Consumer Financial Protection Bureau (CFPB): consumerfinance.gov/complaint
Handles complaints about financial products including certain gift cards
Federal Trade Commission (FTC): ftc.gov/complaint
Addresses deceptive practices and consumer protection violations

State Agencies:

State Attorney General: Each state's AG office has consumer protection division
State Department of Consumer Affairs: Varies by state; handles local violations
Better Business Bureau (BBB): Not governmental but facilitates dispute resolution

Step 3: Legal Action

For significant losses, consider:

Small Claims Court: For claims typically under several thousand dollars
Class Action Lawsuits: Join existing actions for widespread violations
Private Attorney: For larger individual claims or complex situations

Credit Card Purchase Protections

Your Right: Additional protections if you purchased gift cards with a credit card.

Available Protections:

Chargeback Rights: Dispute charges for non-delivery or defective gift cards
Extended Timeframes: Credit card disputes typically allow up to 60 days from statement
Purchase Protection: Some cards offer protection against loss or theft
Fraud Liability Limits: Federal law limits liability for unauthorized credit card use

When to Use Chargebacks:

Gift cards never delivered or received empty/used
Defective cards that issuer refuses to replace
Fraudulent charges on gift cards shortly after purchase
Unauthorized recurring charges if gift card was misused

Special Situations and Rights

Gift Cards Purchased as Gifts

Your Right: Recipients have the same protections as purchasers.

Important Points:

Recipients can report defective cards even without original receipt
Gift givers should provide receipt copies when possible
Issuers cannot require purchaser presence for replacements
Card number alone may be sufficient for some claims

Promotional and Reward Cards

Your Right: Different rules may apply to cards received as promotions or rewards.

Key Differences:

May have shorter expiration periods than purchased cards
May have more restrictive terms and conditions
Federal protections may be limited or inapplicable
State laws still provide some baseline protections

Workplace Gift Cards

Your Right: Gift cards given as employment compensation may have tax implications.

Important Considerations:

Generally considered taxable compensation
Employer should report value on W-2
Same consumer protections apply as regular gift cards
Loss or theft should be reported to employer and issuer

Privacy Rights

Information Collection

Your Right: Protection under various privacy laws when registering gift cards.

What Retailers Can and Cannot Do:

Can collect: Information necessary for card registration and fraud prevention
Must disclose: How information will be used and shared
Cannot require: Excessive personal information unrelated to card function
Must protect: Your data with reasonable security measures

Data Breach Notification

Your Right: To be notified if your gift card information is compromised.

What This Includes:

Timely notification of security breaches affecting your data
Information about what data was compromised
Steps being taken to address the breach
Resources for protecting yourself from resulting fraud

Resources for Asserting Your Rights

Government Resources

Federal Trade Commission: consumer.ftc.gov - Consumer information and complaint filing
Consumer Financial Protection Bureau: consumerfinance.gov - Financial product complaints
USA.gov: usa.gov/consumer - Directory of consumer protection resources

State Resources

National Association of Attorneys General: naag.org - Links to all state AGs
State Consumer Protection Offices: Each state maintains dedicated offices
State Legislatures: Access current laws and regulations

Advocacy Organizations

Consumer Reports: Advocacy and education on consumer issues
National Consumer Law Center: Legal resources and advocacy
Consumers Union: Policy advocacy and consumer empowerment

Keeping Records

Documentation to Maintain

Proper documentation strengthens your ability to exercise rights:

Purchase receipts: Keep indefinitely for proof of purchase and value
Gift card numbers: Record separately from physical cards
PINs and security codes: Store securely but separately
Terms and conditions: Save copies of applicable terms
Transaction history: Track all purchases made with cards
Communications: Document all contacts with issuers
Complaint records: Keep copies of all filed complaints

Educational Reminder: This information is provided for educational purposes only and does not constitute legal advice. Gift card laws vary by jurisdiction and change over time. For specific legal guidance about your situation, consult an attorney licensed in your state. GiftNika does not provide legal services or representation.