The holiday season is a time when gift cards become more common, as people buy them for friends and loved ones or earn them through loyalty programs. While many gift cards are used, others are left unused or lost. Unfortunately, these cards can be subject to various fees and charges, including expiration dates. Some also have location or purchase restrictions, making them unusable. In some cases, a merchant or card issuer may charge monthly fees for reloading money onto the card or a dormant fee. It’s important for consumers to understand if a card is subject to such fees, so they can avoid the frustration of losing out on valuable funds or paying unwanted charges.
While most store gift cards don’t have expiration dates, the law is more complex when it comes to prepaid and credit card gift cards issued by banks and other financial institutions. Under the federal Credit CARD Act of 2009, card issuers can’t set an expiration date on a card unless it’s clearly stated on the card. The act requires all card issuers to provide disclosures related to fees, charges and terms and conditions, which may include information about any expiration date. The federal Office of the Comptroller of the Currency has similar rules that national banks and savings associations must follow when they offer gift cards to their customers.
Currently, most state laws are similar to the federal law on gift cards, but there are some exceptions. For example, the Consumer Fraud Act of Oregon states that cardholders can’t be charged any kind of maintenance or service fees on a gift card that doesn’t have a balance of $5 or less and has been purchased for personal use. However, promotional, loyalty and reward cards can have an expiration date or charge fees if they’re marketed as gifts that are bought for the benefit of another person.
If a store doesn’t honor a gift card or certificate after it expires, customers can file a complaint with the state’s consumer protection agency. In South Dakota, the Department of Consumer Protection often receives complaints from shoppers who were frustrated that a store didn’t accept their expired card or certificate. The department recommends that retailers weigh the pros and cons of including an expiration date on their store gift cards or certificates.
In addition to being a good business practice, implementing an expiration date on a store gift card can help increase the number of transactions. Typically, a higher number of purchases results in increased sales and profits for a retailer. This is especially true if the store has multiple locations or online.
