October 15, 2007
California’s Gift Card Cash Redemption Law Approved
Incredible! Gov. Arnold Schwarzenegger on Saturday, October 13, 2007, signed California Senate Bill ‘SB 250′ into law. Essentially, SB 250 amends Section 1749.5 of the Civil Code to “allow any gift certificate with a cash value of less than $10 to be redeemed in cash, as defined, for its cash value”. Currently, the only other state that allows gift card redemption for cash is Washington state and for gift cards with a cash value less than $5.
However, before you rush out to redeem your gift cards for cash, the new California gift card redemption law does have exemptions to it. The same exemptions in Section 1749.5 that allows certain gift cards to have expiration dates are also applied to the redemption of gift cards for cash. As a refresher, any gift cards that was issued as an award, loyalty or promotional program cannot be redeemed for cash. In addition, gift cards sold at volume discount to employers, non-profits, or charities for fundraising purposes are also exempted.
In addition, there was a minor adjustment governing expiration date for gift certificates issued for food products. Before SB 250 was signed into law, grocery stores can put expiration dates on their gift cards. However, with the new law, only gift cards issued for ‘perishable’ food products can have an expiration date and not all food products. It is going to be interesting to see how grocery stores adjust to this new law with expiration and redemption. As a final note, SB 250 was championed by State Sen. Ellen Corbett, D-San Leandro.
With this new law, Californian consumers do not have to spend more than the face value of the gift card to get the full value of their presents. When Johnny gets a $50 Best Buy gift card from Granny, he can find a present for less than $50 and pocket the change versus having to give Best Buy the change or spending over $50. This new law just swung the pendulum in the favor of the consumer away from the merchants. Massachusetts is also considering a similar redemption law and most states have a tendency to follow what California does. Expect to see efforts from retail associations and national chains to amend, limit this new law, and contain it from spreading.
∙ Governor is clearing his desk of bills [Sacramento Bee]
∙ California Senate Bill ‘SB 250′ [Official California Legislative Info]
Readers' Comment (6) | Posted by Alex | Filed under: Laws & Terms
I want to point out that SB 250 does not take effect until January, 2008. Therefore, you cannot demand cash redemption from gift cards with a remaining balance of less than $10 until next year.
Posted by: anon on October 25th, 2007 at 11:04 am
When you buy a a visa, mastercard or american express card can they loose value if not used right away under this new law????????????????
Posted by: barbara lake on November 1st, 2007 at 2:58 pm
To the best of our knowledge, under California’s new law, bank gift cards, such as Visa, Mastercard, or American Express, can still loose its value, because those bank gift cards are covered by another set of laws. Most prepaid bank gift cards usually have a six months grace period before it starts loosing value to monthly fees.
The state of Connecticut won an appeal that prohibit fees on Visa gift cards. However, the ruling was very narrow and it’ll be some time before other states pass laws banning fees on prepaid bank gift cards.
Posted by: gcnadmin on November 1st, 2007 at 7:45 pm
I would like to know if there is a fine for refusal of refund on a gift card under 10. I’ve gone into the same place twice asking for this specific store to please do the refund and they have refused saying that they don’t have to. she kindly tells me ” we have some great stuff on sale” If there stuff weren’t such crap, and their sales people were on point, I wouldn’t be doing this! any help would be great. A website, phone number, info! Thanks
Posted by: Roma on September 13th, 2008 at 12:36 am
If the merchant does not have an exemption they can state to refuse redemption, then you can always file a complaint with Department of Consumer Affairs at http://www.dca.ca.gov/online_services/complaints/ccru.shtml. If that doesn’t work you can also contact your local TV news station “On Your Side” department.
Posted by: gcnadmin on June 9th, 2009 at 3:21 pm
I understand nearly one hundred million dollars worth of gift cards go unredeemed each year in this country. No wonder they’re putting up racks in supermarkets offering dozens of gift cards, from restaurants, retailers, etc.They all want their share of the sucker money.
Posted by: George Combe on October 12th, 2009 at 2:18 am