Know the Law on Gift Cards and Gift Certificates

Texas Hotel & Lodging Association

Be sure you are familiar with the laws on selling and redeeming gift certificates.  Texas and the federal government have several laws on point with regard to gift cards issued both in paper form and via electronic gift cards.

Expiration

Paper gift certificates (i.e. not an electronic gift certificate) can expire on a set date after purchase, but the seller of the gift certificate must:

  1. Clearly and conspicuously state the expiration date on the certificate itself, and
  2. Disclose the expiration date to the purchaser at the time the purchase is made—regardless if purchased in person, by phone, over the internet, etc.

The same disclosure requirements apply to electronic gift certificates, plus the certificate may not expire for at least five years from the date of purchase.

Also, note that prior to 2010, most expiration disclosure requirements did not apply to gift certificates donated for a charitable purpose.  However, federal law effective in 2010 has done away with most of the distinctions between a gift certificate sold to a consumer and a gift certificate donated for charitable purposes.  As such, THLA recommends that lodging operators always treat paper and electronic gift certificates donated to charity as subject to the above noted requirements.

Fees

It is possible to charge fees for maintaining balances on gift cards, but only if the law on point is closely followed.  The issuer of an electronic gift card may impose or collect a fee that causes the unredeemed balance of the card to decrease if:

  1. the fee is reasonable,
  2. the fee is not assessed until at least one year from the date the card was sold or issued, and
  3. the fee is to the purchaser at the time the purchase is made—regardless if purchased in person, by phone, over the internet, etc.

However, a merchant accepting an electronic gift card may not assess a transaction or processing fee when the card is redeemed.

Redemption for Cash

Effective September 1, 2015, if a gift card is redeemed in person to make a purchase, and the card’s balance is less than $2.50 following the purchase, at the consumer’s request, the retailer must refund the balance of the card to the consumer in cash.

5 comments on “Know the Law on Gift Cards and Gift Certificates

  1. Alyxa on

    I have a new business in the spa industry, I recently issued gift certificates with a blank space for expiration dates.

    Is this allowed in the state of Texas?
    How much time do I give them to redeem the certificate?

    Reply
    • Justin Bragiel on

      Alyxa, you don’t mention if the certificates are in paper (not electronic) form or electronically issued. Regardless of whether in paper form or electronic, if you issue a gift certificate without the expiration date section completed, the certificates cannot expire.

      If the gift certificate is in paper form, you can set an expiration date by filling in the expiration date when you sell the gift certificate. The expiration date must be clearly disclosed to the purchaser of the gift certificate when the gift certificate is issued.

      The same rules apply for electronic gift certificates, but federal law requires electronic certificates to not expire sooner than five years from the date the electronic gift certificate was issued.

      Reply
  2. Lisa on

    I attempted to purchase a visa gift card at a convenience store around 10 PM. The clerk told me due to Texas Blue Laws they could not sell it to me since it was after 9 PM. I’ve done searches but have not found anything about restrictions on time of day when purchasing cash gift card. Is this truly a Texas law?

    Reply

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