Consumers to Benefit this Holiday Season from New Gift Card Law


Consumers to Benefit this Holiday Season from New Gift Card Law

SB 250 (Corbett) will allow consumers to redeem gift cards for cash once they fall below $10

(CA) – Consumers will
get a break this holiday season thanks to a new California law – Senate
Bill 250 by Senator Ellen Corbett (D – San Leandro). The new law gives
consumers the right to cash in an unused or partially used gift card
when the value of the card is less than ten dollars. Currently, gift
cards worth less than five dollars can be subjected to dormancy fees
and a store can refuse to give the remaining value back in cash no
matter how small the value.

"At this time of year
when so many people are purchasing gift cards it is important to know
there are new laws protecting consumers," said Senator Ellen Corbett,
the author of the new law. "With the enactment of SB 250 consumers can
feel more confident this holiday season that when they give a gift card
that they will not be making a donation to a retailer because as of
January 1, 2008, Californians will be able to cash in the remaining
value of a gift card below $10."

"SB 250 was based on
the simple, common sense notion that consumers should get their money’s
worth without having to buy something they don’t really want," said Richard Holober, Executive Director of the Consumer Federation of California. "After all, the retail store or restaurant chain was already paid for the full value of the gift card."

Businesses have
profited mightily from millions of gift cards with small balances that
are never redeemed – an undeserved bonanza for their sellers. Between
2005 and 2006, companies claiming millions of dollars in income from
gift cards that remained unredeemed for two years after they were
purchased included: $43 million for Home Depot; $43 million for Best
Buy; $30 million for Limited Brands; $8 million for Nordstrom; and more
than $7 million for Michael’s Stores.

Thanks to SB 250, come January 1st, California will lead the nation in consumer protections for gift cards users.

The positive impact the new law will have on millions of consumers is highlighted by the recent "Consumer Reports Holiday Shopping Poll"showing
nearly two-thirds (62%) of Americans plan to purchase gift cards this
holiday season – second only to clothing (71%) among respondents.
Nationally, Americans are expected to spend 70 billion dollars this
year on gift cards alone – with billions of those dollars going unused.
For Californians, that’s about to change.