Gift Card and Prepaid Card Rules

The federal limits on gift card expiration and fees, the state laws that go further, and the separate protections for reloadable prepaid cards used like bank accounts.

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What it means

Federal law restricts two things about gift cards and gift certificates: when they may expire and what fees may be charged on them. The funds on a card may not expire earlier than a minimum period after the card was issued or last loaded, the expiration date must be printed on the card, and a dormancy, inactivity or service fee may be charged only after a period of non-use, only once in a further period, and only if the fee terms were clearly disclosed before purchase. The rules cover store gift cards and general-use prepaid cards sold as gifts; they do not cover reloadable cards not marketed as gifts, loyalty or promotional cards given away free, or cards for telephone service.

Many states go further. A number prohibit expiration of gift card funds altogether or extend the federal period, several require a merchant to pay out a small remaining balance in cash on request, and most treat unredeemed balances after a period as unclaimed property that the issuer must report to the state - which is why a card that has expired on its face may still have a balance the state holds. Where a state rule is more protective than the federal one, the state rule applies.

Reloadable prepaid cards used in place of a bank account - payroll cards, government benefit cards, general-purpose reloadable cards - are covered by a separate federal rule that requires standard fee disclosures before purchase, periodic statements or online account access, and the error-resolution and unauthorized-transfer protections that apply to debit cards, provided the card has been registered with the issuer. An unregistered reloadable card may carry far less protection if it is lost or stolen.

Where this comes from

When people hire a lawyer for this

A consumer told a gift card has expired or been eaten by fees should ask for the fee terms disclosed at purchase and check the state's unclaimed property office before accepting the loss; most disputes at this scale are resolved by the issuer once the rule is cited. A business that issues its own gift cards needs both the federal rule and its state's expiration, cash-back and unclaimed property rules built into the program, because the unclaimed property obligation is audited and carries penalties.

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Related terms

Other entries in the same area of law, each written from the same primary sources.

• Automatic Renewal and Negative Option SubscriptionsThe federal and state rules on subscriptions that keep charging until you cancel - what a seller must disclose and obtain before enrolling you, the cancellation mechanism it must offer, and where the law currently stands.
• Billing Error Dispute (Credit Card Chargeback)The federal procedure for disputing a charge on a credit card statement - a written process with deadlines on both sides that the card issuer must follow, not a courtesy it may offer.
• Class ActionOne lawsuit brought by named plaintiffs on behalf of a larger group with the same injury.
• Cooling-Off Rule (Canceling a Door-to-Door Sale)The federal right to cancel certain sales made at your home or away from the seller's regular place of business, the notice the seller must give you, and the many sales it does not reach.
• Credit Freeze and Fraud AlertTwo free federal tools for stopping identity thieves from opening accounts in your name - one that locks your credit file, one that warns lenders to check who they are dealing with.
• Credit Report DisputeThe federal process for forcing a credit bureau and the company that reported an item to investigate information you say is wrong.
• Data Breach Notification RightsWhat a business must tell you when your personal information is exposed, which laws require it, what the notice must say, and what a person whose data was breached can actually claim.
• Debt Validation Notice and Disputing a DebtThe written notice a debt collector must send when it first contacts you, what it must contain, and the dispute right it opens - during which the collector must stop until it verifies the debt.
• Fair Debt Collection (Collector Conduct Rules)Federal limits on what a third-party debt collector may say and do - including a written demand that stops contact, and a 30-day right to make them verify the debt.
• Identity Theft Recovery RightsThe federal rights a victim of identity theft can use to remove fraudulent accounts from a credit report, obtain the records of what the thief did, stop the debts being collected, and limit liability for the charges.
• Implied Warranty and the Magnuson-Moss ActThe promises the law reads into a sale whether or not anyone wrote them down, and the federal act that limits how a seller can take them away.
• Mandatory Arbitration ClauseA term in a consumer contract that sends any dispute to a private arbitrator instead of a court, usually alone rather than as part of a class - and federal law makes most of them enforceable.
• Right of Rescission (Home Loans)A federal right to cancel certain loans secured by your home during a short window after signing - and for much longer if the lender failed to give the required disclosures.
• Robocalls and the TCPAThe federal law that restricts automated and prerecorded calls and texts to your phone, gives you a Do Not Call right, and lets you sue for a fixed amount per illegal call.
• Time-Barred DebtA debt so old that the statute of limitations bars a lawsuit to collect it - what a collector may and may not do about it, how a payment can revive it, and why the credit-reporting clock is a different clock.
• Unauthorized Debit Card and Electronic Transfers (Regulation E)The federal rules that limit a consumer's loss from an unauthorized debit card, ATM, ACH or payment-app transfer, require the bank to investigate an error, and decide who bears a loss the consumer was tricked into sending themselves.
• Unfair and Deceptive Practices (UDAP)The consumer-protection laws, one federal and one in every state, that make it illegal for a business to mislead you or treat you unfairly - and the state versions are the ones a consumer can actually sue under.
• Vehicle RepossessionA lender's right to take back a financed car after default without going to court - subject to rules about how it is taken, how it is sold, and what you can still be made to pay afterwards.
• Wage GarnishmentA legal order requiring an employer to withhold part of someone's pay and send it to a creditor.

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