Federal Government and Gift Cards

It is interesting to take a quick read of this article written over 5 years ago to see what the federal governmant stance towards gift cards was. At the time, the federal government had yet to take a stand on gift cards regarding expiration and more.

It remains true to this day that the majority of heavy lifting around gift card regulation has been left to the states. The good news is that the states have done a very good job. You will be hard pressed to find a state that allows gift cards to have expiration dates. Long gone are the abusive practices of short expiration dates on gift cards that favored the merchants. This has been one of the factors in the massive boom we have seen in the gift card market.

Many states have also enacted laws that dictate that the merchant give cash back to the card holder once the balance has gone below a certain level. This has also closed a nice little loophole for merchants. Assume a person has a gift card for $300 to itunes and they go on to buy the entire Pearl Jam catalog and it costs them $295. At that point, they are left with an almost useless $5 gift card.

In the past, that $5 would almost always go unused to the benefit of the merchant. New laws in many states insist that (in this case) Apple gives the $5 in cash to the gift card owner.

All of this is positive momentum in the world of gift cards and simply making it a fair and level playing field.