Gift Cards: Make Sure You Get The Full Face Value

I should have known better than to criticize my Aunt Jenny’s taste in Christmas presents. 

In , I discussed the law covering store return policies, and I implied that I might have returned the orange plaid shirt that Aunt Jenny gave me for Christmas several years ago. 

Although I live half a continent away, it took my dear auntie exactly seven hours to find out what I had done. I then received a brief, but pointed e-mail. “I guess I’ll save us both a lot of trouble and just get you a gift card from now on.”

Gift cards have become increasingly popular, and I am sure that many of you have received at least one, probably several, during the holiday season. 

In the last few years both the federal government and the State of Ohio have enacted laws that provide some protection for the value of gift cards. However, even with those rules, your gift card can lose value or become worthless, if you don’t pay attention to the following rules:

Your gift card can expire. By federal law, a gift card that is redeemable for general goods or services cannot have an expiration date less than five years after the card was issued. If the gift card can be reloaded, the card cannot expire less than five years after the last time money was added to the card. The expiration date and any other conditions relating to the expiration of the card must be stated clearly on the card.

Your gift card can lose value. The company that issues a gift card can impose fees on the card that reduce its value over time. The most typical is an “inactivity fee” that is charged for maintaining a card that is not being used. These fees can eventually reduce the value of the card to zero, even though the card has not technically expired. 

For gift cards that can be used at multiple stores, like Visa, Mastercard or mall gift cards, an inactivity fee cannot be charged unless the card has been inactive for a full year, and a fee can be charged only once a month while the card is inactive.  For gift cards that can be used only at a single store, or at a group of affiliated stores, no fees can be charged at all during the first two years after the card has been issued. The amount of any fee and all conditions relating to the fee must be stated clearly on the card.

The laws don’t cover certain types of cards.  In general, the gift card laws apply only to cards that are purchased at full face value. They do not apply to customer loyalty cards (“buy-ten-get-one-free”), cards that are sold as fundraisers by charitable organizations, or cards that are purchased at a discount and then given away by employers as rewards or incentives.

Although Ohio does give some protection to consumers, at least one consumer group continues to give Ohio a grade of “F” for its regulation of gift cards, because its protections do not go far enough. ScripSmart.com points out that some states do not allow gift cards to expire at all, do not allow any inactivity fees and require stores to give cash back when the balance on a gift card falls below a certain amount.  The fact that Ohio has none of these protections earns Ohio an “F” on the ScripSmart site.

Of course, the best way to ensure that your gift card doesn’t lose value is to use it at one of the post-Christmas sales. I already have plans to head to the mall with Aunt Jenny’s card in hand. If I can find an orange plaid shirt, maybe I can tell her I was just kidding.