Gift certificates are a great way for California businesses to increase their bottom line. Shoppers that do not know exactly what to give their friends or loved ones can instead give a gift certificate. Before issuing gift certificates (or gift cards), a business should be aware of the various requirements that California law imposes on gift certificates one of which is discussed in this post.
In California, a gift certificate usually cannot expire*.
Exceptions to this rule apply if the gift certificate is issued on or after January 1, 1998, the expiration date appears on the front of the gift certificate in capital letters in at least 10-point font and any of the following apply:
1. If the gift certificate is for an awards, loyalty or promotional program where money or any other thing of value is not exchanged for the gift certificate;
2. If the gift certificate is sold below face value at a volume discount to employers or nonprofit and charitable organizations for fund raising purposes if the expiration date on the gift certificates is not more than 30 days after the date of sale; or
3. If the gift certificate is issued for a food product.
Logically, this general rule makes sense. The purchaser is essentially advancing the gift certificate issuer his/her money. In exchange, the business will provide a product (or service) at a later date to the person that holds the gift certificate. The issuer would unfairly profit if it required the gift certificate holder to redeem it within a certain amount of time.
There are other requirements that an issuer of a gift certificate or gift card must follow to be in compliance with California law. If you or your business need further assistance, please do not hesitate in contacting our office.
Scott D. Wu is an attorney licensed to practice in California. His firm focuses on various aspects of business law, contract drafting and negotiation, family law, personal injury and real estate.
*California Civil Code Sections 1749.5-1749.51 govern gift certificates issued in California.
The information on this blog is not legal advice, nor is it intended to create an attorney-client relationship. Legal questions should be directed to a lawyer of your own choosing.
