New law in 2008 allows consumers to redeem gift cards for cash
On Jan. 1, consumers
will be able to redeem gift cards for cash if the balance is less than
$10, thanks to a new law sponsored by state Sen. Ellen Corbett, D-San
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.
Richard Holober, Executive Director of the Consumer Federation of California,
which is based in San Mateo, said, ‘Consumers should be aware that any
dormant gift cards they have worth less than $10 can be redeemed for
cash starting Tuesday.’
‘As long as the card was bought 1997 or later, you’ll get your cash
back. After all, the retail store or restaurant chain was already paid
for the full value of the gift card.’
The new law, SB 250,
makes California the most consumer-friendly state in the nation when it
comes to gift card laws. Vermont allows cash back for up to $1, while
Washington and Montana laws give money back up to $5.
Holober said businesses have profited mightily from millions of gift cards with small balances that are never redeemed.
He said that between
2005 and 2006, companies claimed millions of dollars in income from
gift cards that remained unredeemed for two years after they were
the claims include $43 million for Home Depot, $43 million for Best
Buy, $30 million for Limited Brands, $8 million Advertisement for
Nordstrom and more than $7 million for Michael’s Stores.
He said the law will
have a positive impact on millions of consumers because a recent
‘Consumer Reports Holiday Shopping Poll’ showing nearly two-thirds of
Americans (62 percent) planned to purchase gift cards this holiday
season, second only to clothing among respondents (71 percent).
Holober said nationally, Americans are expected to spend $70 billion this year on gift cards alone, with billions of those dollars going unused.
He said the law
doesn’t apply to credit card gift cards or ones tied to multiple
stores, such as mall gift cards, or gift cards issued as a part of a