DennisBeaverMarch 8, 2006 (Original publish date) • By Dennis Beaver

When Redway, California resident Carolyn Green purchased $75.00 worth of gift certificates from a local market in December, 2004 as a Christmas present for her son, she had no idea that a few months later the result would be a significant change in the way the market does business.

But that’s exactly what happened when my feisty “well over 60” reader noticed the certificates were about to expire. “It really seemed unfair that they could expire in only six months. Is that legal?” she asked in a fax sent to me that read, in part:
It was explained at the time of purchase, they would not issue any change or credit for amounts unspent. I purchased several in denominations of $10 and $5 amounts, thinking my son could easily use them that way, to avoid losing the money.

I do admit that at the bottom of each certificate, an expiration date of six months in advance was typed in all caps.

Unfortunately, most are still unused and just about to expire. Will my son lose the value of these certificates merely because they were not used within the six months stated? It just seems odd that my gift to him should vanish, and the market gets to keep the money!

Expiration Dates Illegal on Gift Certificates in California

Carolyn is in good company thinking that there is indeed something unfair about a gift certificate–or a gift card–losing value just because it isn’t used within a few months. Well, folks, in California, in most cases it is against the law to have an expiration date on a gift certificate or a gift card. The source of this law is California Civil Code Sections 1749.45 – 1749.6. I must point out that California is one of only five states with a “no expiration on gift certificate” law.

So, if you purchase a Starbucks Coffee Gift Card in California for $25.00, the law makes an expiration date illegal.

Additionally, Starbucks cannot legally charge a monthly maintenance fee, slowly eating away at the value of the card, under most circumstances.

I must point out that pre-paid calling cards issued solely to provide an access number are not covered by this law, as they are regulated federally. It is customary for most of the pre-paid calling cards sold (with the exception of legitimate phone companies, AT&T, Sprint, MCI and others) to greatly short-change users on minutes actually available. Many self-destruct in a matter of months, making the often shady companies who sell these pre-paid calling cards a huge amount of money, many argue, illegally.

Immediate Corrective Action By the Market

Not many people know that the consumer has this very important legal protection in California, and it was clear to me that the Oregon-based market had to be unaware of our laws concerning gift certificates. Therefore, I contacted the corporate headquarters in Brookings, Oregon and spoke with an extremely nice Customer Relations manger, Naomi Smith. When California law was pointed out to her, she immediately agreed to my suggestions which would help Carolyn and other customers:

(1) Re-issue my reader’s certificates.

(2) Reprint all of your gift certificates for use in California, removing the expiration date; and

(3) Have your employees let customers know that if they have an expired gift certificate, it will be honored.

“In Oregon, expiration dates are legal,” she correctly pointed out to me, and immediately accepted complete responsibility for the mistake. It is rare to see that kind of corporate honesty, and I told her so. I also let my reader know that her market stepped up to the plate and did the right thing, once they were informed of the law in California.

I am very proud of Carolyn Green. Thanks to her belief that something just seemed wrong, we were able to bring about a positive change in the way a business operates – all of it done without anyone rushing off to the courthouse.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.