US Federal Law: The Credit CARD Act of 2009

In the United States, the foundational law for gift card protection is the Credit CARD Act of 2009. This law established critical federal standards that apply to most gift cards (both store-specific and network-branded).

Key protections under the Credit CARD Act include:

  • 5-Year Minimum Expiration: Money loaded onto a gift card cannot expire for at least five years from the date of purchase or the last time funds were added.
  • 12-Month Inactivity Rule: Retailers cannot charge "inactivity" or "dormancy" fees until the card has gone unused for at least 12 consecutive months.
  • Single Fee per Month: Only one inactivity fee can be charged per month after that initial 12-month period.
  • Clear Disclosure: All fees and expiration dates must be clearly printed on the card or its packaging.

US State Laws: Stronger Than Federal

Many US states have passed laws that provide even stronger protections than the federal Credit CARD Act. When federal and state laws conflict, the law that is most favorable to the consumer typically applies.

  • California: Gift cards sold in California never expire. Additionally, if a card's balance is below $10, the consumer has a legal right to redeem it for cash.
  • New York: As of 2022, gift cards sold in NY are valid for 9 years from the date of purchase, and most inactivity fees are prohibited.
  • Massachusetts: Gift cards are valid for 7 years from the date of purchase, and any unused balance after that must be turned over to the state's unclaimed property division (where you can still claim it).

Canadian Gift Card Regulations

In Canada, gift card laws are managed at the provincial level. Most provinces, including Ontario, British Columbia, and Alberta, have strict laws that prohibit expiration dates on "standard" gift cards (those purchased for a specific value). However, these rules often don't apply to "promotional" cards given for free as part of a marketing campaign.

European Union Regulations (PSD2)

The European Union regulates gift cards under the Payment Services Directive (PSD2). In the EU, open-loop cards (like Visa/Mastercard gift cards) are treated as "electronic money" and are subject to strict oversight. Consumers have a right to redeem their balance for cash at any time, though the issuer is allowed to charge a fee for this service if it's stated in the contract.

Latin American Context

In Latin America, consumer protection agencies (like PROFECO in Mexico or SERNAC in Chile) regulate gift cards. In Mexico, for example, the law requires that expiration dates be clearly visible, and many jurisdictions are moving toward a "no expiration" model similar to Canada and parts of the US.

Escheatment: The "Unclaimed Property" Law

What happens to the money on a gift card that is forgotten for 10 years? Most US states have escheatment laws. These laws require companies to turn over "abandoned" gift card balances to the state treasury after a certain period (usually 3 to 5 years of inactivity). This is a good thing for consumers! It means you can often search your state's "Unclaimed Property" database and recover the cash value of a long-lost gift card.