Q: My gift certificate expired.
Is this legal?
A: California law now holds that it is unlawful to sell
a gift certificate that contains any of the following:
- An expiration date;
- A service fee, including, but not limited to, a service fee for dormancy (except under severe restrictions); OR
- A term that makes its redemption or other use invalid in the event of a bankruptcy.
Further, any gift certificate sold after January 1, 1997, is redeemable in cash for its cash value,
or subject to replacement with a new gift certificate at no cost to the purchaser or holder.
EXCEPTIONS: For gift certificates issued on or after January 1, 1998, AND provide the expiration date in capital letters
in at least 10-point font on the front; THEN:
- Gift certificates that given for free as an award, loyalty, or promotional program;
- Gift certificates that are sold below face value at a volume discount to employers or nonprofit and charitable organizations
for fundraising, IF the expiration date is not more than 30 days after the date of sale; OR
- Gift certificates issued for a food product.
Note: the restriction on including an expiration date does not prevent an issuer of gift certificates from including on
any gift certificate, on or after January 1, 2004, a provision that entitles the purchaser to a full refund of the amount
that he or she paid for that gift certificate upon the occurrence of the following circumstances:
- The gift certificate is purchased as a gift;
- The time in which the gift certificate may be redeemed for cash by the receiver of the gift is disclosed on the gift certificate;
- The receiver of the gift certificate as a gift does not redeem it on time.
Therefore, it appears that a person who gets the gift certificate as a gift may have a time period
within which to redeem the card for cash, as long as the person who bought the card can still do so, and the certificate so
states.
Lastly, the gift certificate constitutes value held in trust by the issuer of the gift certificate
on behalf of the beneficiary of the gift certificate, and not to the issuer, and therefore an issuer in bankruptcy shall continue
to honor a gift certificate issued prior to the date of the bankruptcy filing on the grounds that the value of the gift certificate
constitutes trust property of the beneficiary; however, in the event of bankruptcy, this provision does not require the issuer
of a gift certificate to redeem a gift certificate for cash, replace a gift certificate that has been lost or stolen, or maintain
a separate account for the funds.
Otherwise, any gift certificate sold without an expiration date is valid until redeemed or
replaced.
