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Gift Card and Prepaid Card Rules

The federal limits on gift card expiration and fees, the state laws that go further, and the separate protections for reloadable prepaid cards used like bank accounts.

Informational only - this is not legal advice. These definitions explain general legal vocabulary in plain English. They are not advice about your situation, reading them creates no attorney-client relationship, and the law differs from state to state and changes over time. For advice you can rely on, speak to a lawyer licensed in your state.

What it means

Federal law restricts two things about gift cards and gift certificates: when they may expire and what fees may be charged on them. The funds on a card may not expire earlier than a minimum period after the card was issued or last loaded, the expiration date must be printed on the card, and a dormancy, inactivity or service fee may be charged only after a period of non-use, only once in a further period, and only if the fee terms were clearly disclosed before purchase. The rules cover store gift cards and general-use prepaid cards sold as gifts; they do not cover reloadable cards not marketed as gifts, loyalty or promotional cards given away free, or cards for telephone service.

Many states go further. A number prohibit expiration of gift card funds altogether or extend the federal period, several require a merchant to pay out a small remaining balance in cash on request, and most treat unredeemed balances after a period as unclaimed property that the issuer must report to the state - which is why a card that has expired on its face may still have a balance the state holds. Where a state rule is more protective than the federal one, the state rule applies.

Reloadable prepaid cards used in place of a bank account - payroll cards, government benefit cards, general-purpose reloadable cards - are covered by a separate federal rule that requires standard fee disclosures before purchase, periodic statements or online account access, and the error-resolution and unauthorized-transfer protections that apply to debit cards, provided the card has been registered with the issuer. An unregistered reloadable card may carry far less protection if it is lost or stolen.

Where this comes from

Electronic Fund Transfer Act § 915, 15 U.S.C. § 1693l-1 (added by the Credit Card Accountability Responsibility and Disclosure Act of 2009), implemented by Regulation E, 12 C.F.R. § 1005.20 (gift card expiration dates, fees and disclosures, and the exclusions); prepaid accounts are governed by 12 C.F.R. § 1005.18 (the prepaid accounts rule). Representative state provisions are California Civil Code § 1749.5 (no expiration; cash redemption of small balances) and each state's unclaimed property act.

When people hire a lawyer for this

A consumer told a gift card has expired or been eaten by fees should ask for the fee terms disclosed at purchase and check the state's unclaimed property office before accepting the loss; most disputes at this scale are resolved by the issuer once the rule is cited. A business that issues its own gift cards needs both the federal rule and its state's expiration, cash-back and unclaimed property rules built into the programme, because the unclaimed property obligation is audited and carries penalties.

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Part of the LawyerLand plain-English legal glossary. Definitions are written from primary sources - statutes and court rules - and each entry states the authority it rests on, or says plainly when the doctrine is state law with no national rule.

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