Gift cards were not always limitless cash alternatives. There was a time when consumers were forced to use their gift cards or certificates within a certain timespan before they expired. That all changed with the Credit Card Act of 2009 which enacted certain legislations regarding credit and gift card processing at small businesses to promote an open-end consumer credit plan. Some states still have gift card expiration dates if it’s conspicuously stated on the card. Nevertheless, there are certain gift card expiration laws to know for any small business with this type of payment processing technology.
Credit Card Act of 2009
The main overarching legal jurisdiction over gift cards is the Credit Card Act of 2009. President Barack Obama signed this bill into law as a comprehensive credit card reform for fair and transparent practices between consumers and businesses. The Act prohibits dormancy fees—also known as inactivity fees— on prepaid cards, gift certificates, and store gift cards unless there was a 12-month period of inactivity. It also prohibits the sale of gift cards with expiration dates unless the terms of expiration are clearly stated, or five years after the card was purchased or money was added to it. The final clause in the Act about gift cards claims sellers must notify consumers of any gift card fees or charges before the final sale. The Credit Card Act of 2009 applies to all retail gift cards, gift certificates, and prepaid cards including Visa, MasterCard, American Express, and Discover gift cards, but does not apply to reloadable phone cards or gift cards for business use.
Even still, certain states have specific gift card expiration laws to know and follow after years of inactivity. This includes: Arizona; Arkansas, two years; California; Colorado; Connecticut; Florida; Georgia; Hawaii; Illinois; Iowa; Kansas, one year; Kentucky; Louisiana; Maine; Maryland, four years; Massachusetts, seven years; Michigan; Minnesota; Montana; Nebraska; Nevada, three years; New Hampshire, five years; New Jersey; New Mexico, five years; New York; North Carolina, one year; North Dakota, six years; Ohio, two years; Oklahoma, five years; Oregon, except if the card is sold below face value, then has one month for use after the expiration date; Rhode Island; South Carolina, five years; Tennessee, two years; Texas; Utah; Vermont; Virginia; and Washington. States without set years either have no expiration dates, or they are only allowed if conspicuously printed on the card or have a sticker affixed to the card at the time of purchase.
When selling or processing fit cards at your business, it’s important to have the right retail accounting software on hand. Our BPAPOS retail software is the perfect solution for your small business, as it’s complete with integrated credit and gift card processing, inventory management, bar code printing, and an accounting system. It comes free with our BPAPOS hardware systems for complete functionality at your retail or commercial business.