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Government Relations By Nancy Potter Gift Certificate and Gift Card Law 101 Gift certificates and gift cards are a great way to develop your massage business year-round. However, it's important that you familiarize yourself with federal and state laws addressing expiration dates, fees, redemption, and potential penalties. The laws can be complicated, but here are some basics everyone should know. Federal vs. State Law The federal Credit Card Accountability Responsibility and Disclosure Act of 2009, known as the Credit CARD Act, imposes legal restrictions on gift certificates and gift cards. Additionally, the majority of states have their own gift certificate/gift card laws, which vary greatly. If your state's law conflicts with the federal law on a particular issue, then you must follow whichever rule is stricter. Federal law applies only to plastic gift cards and electronic gift certificates (for example, those generated from a website or issued by email). The federal law does not apply to gift certificates that are issued in paper form only. By contrast, most states' laws apply to both paper gift certificates and plastic or electronic gift cards/ certificates. As a result, if you sell only paper gift certificates, you will only need to be concerned about your state's law. Expiration Dates Under the federal law, gift cards and electronic gift certificates issued after August 22, 2010, cannot expire, unless (1) the expiration date is at least five years after the date of the card or date of issuance, and (2) the expiration date is conspicuously stated on the card or certificate. If you do not conspicuously state an expiration date that is at least five years out, then you must honor the card or certificate no matter when the holder presents it to you. Inactivity Fees and Cash Redemption You are allowed to charge an initial one-time service fee when you issue a gift card or electronic certificate under the federal law, and also under most states' laws. However, federal law prohibits inactivity fees unless the card or electronic certificate was not used for a full 12 months prior to the date the fee is imposed, and the terms of the fee were conspicuously stated on the card or certificate. Penalties Penalties for violations of the law include payment of monetary damages to the gift certificate/card holder, statutory damages of DS 4 March April 2013 State Laws Vary In some states, like California, Florida, and Washington, gift certificates/cards can never expire. In others, gift certificates/ cards can expire as long as the date is disclosed on the certificate or card, or they can expire, but the card must remain valid for a certain period of time after it is issued. It's important to know the laws in your state. For a user-friendly summary of your state's gift certificate/card laws, go to www.scripsmart.com/states. This resource is a general guideline only; specific questions about your state's particular rules should be directed to an attorney. up to $1,000 per violation, and payment of the complaining party's legal costs and attorney's fees. Because the penalties for violations can be significant, it's important to understand your state's laws, as well as the federal law, and take the restrictions on gift certificates and gift cards seriously. Nancy Potter is ABMP's government relations coordinator. Contact her at nancy@abmp.com.