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State and Federal Laws Protect Consumers Who Buy and Receive Gift Cards

     Virtually everyone gets or gives a gift card for a holiday or a birthday. On average, eight of every ten consumers will buy a gift card for holiday giving alone. The gift card business is a billion-dollar industry. Now there is a federal gift card law as well as an Ohio gift card law to help protect you if something goes wrong.
 
Q: Why are there two laws covering gift cards?
A: The state law was enacted several years before the federal law, and each law covers different gift cards in different circumstances, with some overlapping coverage. Because gift cards may sometimes be used in different states, a federal law was needed to protect consumers who purchase and receive gift cards.
 
Q: What do the gift card laws do?
A: Under Ohio’s law, a gift card must maintain its full value for at least two full years from the date it was issued. The Ohio law also prohibits retailers from charging service or other fees for two years from the date the card was issued. The federal gift card law only covers store-issued gift cards and bank-issued gift cards, but it requires those cards to have full value for at least five years. It is important to remember that, when you buy a gift card at a third-party location, only the Ohio law applies. Such a third-party location, called a “card mall,” might be a kiosk within a grocery store or a drug store that offers cards from a wide variety of other sources.
 
Q: Do these laws apply to all gift cards?
A: No. The Ohio law does not apply to cards given as part of a customer loyalty program, cards sold by non-profit organizations, cards given to employees by their employers or gift cards that are usable at any unaffiliated sellers of goods or services, such as Visa or MasterCard, etc., or to prepaid telephone calling cards. The federal law only applies to store-issued and bank-issued cards and to gift cards that are freely given away as a promotion.
 
Q: Can I be charged a fee if I don’t use my gift card for a while?
A:  If your card is covered by the Ohio law only, then you do not have to pay any fees for at least two years. If the gift card is covered by the federal law, then any fees have to be clearly disclosed on the card itself or with its packaging, and no fee can be imposed unless the card has not been used for at least a year.
 
Q: If I receive a card with no expiration date, will be good for only two years?
A:  No. The law says that a card that does not include an expiration date is presumed to be valid forever.
 
Q: What if I buy or receive a card through an online source or from a retailer in another state? Might Ohio’s law still apply?
A: If the seller delivered it to you in Ohio, then Ohio’s law likely would apply. If you bought it in another state, then that state’s gift card law likely would apply. Depending on the kind of card it is, the federal gift card law also may apply. You can read about other state gift card laws, and find a summary of the federal gift Card law at www.scripsmart.com/federal_gift_card_law#state_impact.
 
Q: What can I do if an Ohio store breaks the law and won’t honor the full value of my card?
A: You can go to small claims court and ask for compensation. You can only ask to be compensated for the original value of the card, plus court costs and attorney fees, but if the judge rules that the Ohio Consumer Sales Practices Act has also been violated, then you may even recover up to three times the full amount of the card plus costs and attorney fees.

 You can also: 1) file a complaint with the Ohio Attorney General (www.ohioattorneygeneral.gov/about-ag/file-a-complaint.aspx); 2) file a complaint with the Consumer Financial Protection Bureau (www.consumerfinance/gov/complaint/); or 3) for cards issued by national banks, you can file a complaint with the Comptroller of the Currency (customer.assistance@occ.treas.gov).
 
Q: Is the law relating to gift cards likely to change?
A: The Gift Card Consumer Protection Act has recently been introduced in the U.S. Congress. This Act would ban gift cards with expiration dates and non-use fees. It would also prevent companies filing for bankruptcy from selling gift cards and require them to accept and honor unredeemed cards.
 
1/7/2013
 
This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by consumer advocate Ronald Burdge, an attorney with the Dayton firm of Burdge Law Office Co LPA. 
Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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