Gift Cards

Consumers have certain gift card rights under Ohio law and additional rights under federal law. Both sets of rights combine to provide the maximum protection for consumers. In general, most gift cards must last at least five years and sellers generally cannot impose inactivity fees for at least two years after the card’s issue date.

How can sellers comply with both Ohio and federal gift card regulations?

For single-merchant gift cards or affiliated-merchant gift cards, sellers cannot impose fees for two years (excluding prepaid phone cards and gift cards exempted by Ohio’s Gift Card Act, Ohio Revised Code (ORC) Section 1349.61).

After the two-year period, sellers may charge fees only after a 12-month period of inactivity and only one fee within a given month. The fee type, amount, and frequency must be clearly and conspicuously disclosed on the card and made known to the buyer before the purchase.

For prepaid network-branded gift cards, which are redeemable at any merchant who accepts the brand, fees can be administered once a month after a 12-month period of inactivity. In other words, sellers do not have to wait two years as they do with single-brand gift cards. This is because Ohio law, which prohibits fees for the first two years, does not apply to mall cards, bank-branded gift cards, or credit-branded gift cards.

What are the requirements for expiration dates?

A general-use prepaid card, gift certificate, or store gift card cannot have an expiration date within five years of the date the card was issued or within five years of the date funds were last loaded on the card, unless the end use is for business purposes. The expiration terms also must be clearly and conspicuously stated.

Reloadable cards marketed as gift cards must alert consumers to any difference between a card’s expiration date and the funds’ expiration date. It also must explain that the consumer may obtain a replacement card (or a refund, at the discretion of the issuer) without any fee as long as the underlying funds still are valid.

Ohio’s gift card law

Under Ohio’s Gift Card Act, most single-store gift cards, for which the merchant has received payment for the full monetary value, must not expire or be assessed fees within two years of the date the card was issued. Specifically, merchants cannot sell gift cards or gift certificates with an expiration date of less than two years from the date the gift card was issued (federal law extends this to five years, in many cases). If the gift card has no expiration date, it is valid until redeemed or replaced with a new gift card. Merchants may not charge service fees, dormancy fees, latency fees, administrative fees, or any fees that reduce the total amount of the gift card, within two years of the card being issued.

What cards are not covered by Ohio’s gift card law?

Ohio’s Gift Card Act does not apply to gift cards or gift certificates that are:

• Distributed pursuant to an awards, loyalty, or promotional program where the consumer gives no money or anything of value in exchange for the card;
• Sold below face value at a volume discount to employers or sold to nonprofits and charities for fundraising purposes, if the card expires within thirty days after the sale date;
• Sold by a nonprofit or charitable organization for fundraising purposes;
• Issued to an employee from an employer for use exclusively at the employer’s business establishment, which includes a group of merchants that are affiliated with that business establishment;
• Used to purchase hunting or fishing licenses or other wildlife permits, as defined under ORC 1533.131;
• Issued by an employer to an employee in recognition of the employee’s service; or
• Useable with multiple retailers who have no affiliated goods or services, including mall cards, bank-branded gift cards, and credit-branded gift cards.

Liability for violating Ohio’s gift card laws

Whoever violates Ohio’s gift card laws is liable to the holder for any amount that the redemption value of the gift card was reduced, any court costs incurred, and reasonable attorney’s fees.

Federal law

Provisions of the federal Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (Credit CARD Act) require most gift cards to last at least five years.

Sellers cannot impose inactivity, dormancy, or service fees on gift certificates, store gift cards or general-use prepaid cards unless the card has been inactive for one year (but not during the first two years, if Ohio law applies). After a 12-month period of inactivity, one fee may be imposed per calendar month.

Additionally, the seller must clearly and conspicuously disclose any inactivity, dormancy, or service fees on the card or certificate itself.

What cards are not covered by the federal law?

The federal gift card rules do not apply to cards where the end use is for business purposes, such as a gift card issued from an employer to an employee for travel expenses. Additional exclusions include cards that are issued because of a loyalty or promotional program, reloadable prepaid cards not labeled as gift cards, and cards not marketed to the general public. To qualify for the loyalty or promotional exemption, the front of the card must state the expiration date and that the card is intended for loyalty, promotional, or award purposes.

Cards that are issued in paper form only, without any necessary information in electronic form, also are excluded, as are cards that provide a certain percentage off a purchase, such as a card that offers “20 percent off any purchase.”

Additionally, the federal restrictions do not apply to certificates that are for a certain service or experience, such as a spa treatment, or solely for admission to an event or venue, such as an amusement park ticket, when such certificates are not issued in a specified amount. On the other hand, if a card for a service states a specified amount or specifies a monetary value, it is subject to the rules, unless other exemptions apply.

Overview of gift card rules

• Many gift cards must last at least five years from their issue date.
• For single-store gift cards, fees generally cannot be assessed for at least the first two years and then only after a 12-month period of inactivity (one fee per month).
• For multiple-store gift cards (useable at unaffiliated merchants), a fee generally can be assessed after a 12-month period of inactivity, but only one fee may be assessed per calendar month.
• State and federal gift card laws differ, but many sellers must comply with both to provide the maximum protection for consumers.