The Consumers Union Model State Gift Card Law

This legislation would prevent consumers from losing the value on their gift cards.

The Consumers Union Model State Gift Card Law

Consumers have an enormous amount of money on retailer gift cards that need protection. The TowerGroup estimated that in 2006, approximately $80 billion was spent to purchase gift cards.(1) The same research firm found that about $8 billion remained unredeemed on gift cards in 2006.(2) Additionally, consumers do not know whether they may suddenly be carrying, or even worse, purchasing, worthless gift cards.
Over thirty states have passed gift card laws that require more than the disclosure of terms to consumers. To see if your state has a law, and what protections the law provides, see “State Gift Card Laws” (pdf)
However, many gift cards do not have adequate consumer protections, particularly when a retailer files for bankruptcy. Consumers are now discovering their gift cards may be greatly devalued or not worth anything at all when a retailer declares bankruptcy. There is no guarantee to consumers that they will be able to obtain the prepaid value on their gift cards.
This legislation would prevent consumers from losing the value on their gift cards, by: eliminating expiration dates and fees, and eliminating devaluation due to the passage of time or bankruptcy by requiring the segregation and maintenance of gift card funds in a separate trust.
For the Model Law, click here (PDF format).
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(1) With Soaring Gift Card Sales Poised to Exceed $80 billion in 2006, Unused Card Values Are Also on the Rise, TowerGroup Press Release, November 20, 2006.
(2) With Soaring Gift Card Sales Poised to Exceed $80 billion in 2006, Unused Card Values Are Also on the Rise, TowerGroup Press Release, November 20, 2006.