Consumers Protected Under Gift Card Rules

Many gift cards will be under the tree this holiday season, and consumers should know the state laws that protect them from getting ripped off.

Gift cards and certificates cannot expire within nine years and are not allowed to decline in value. If the remaining value on a card is less than $5, it can be redeemed for cash. Fees that cause a card to decline in value are also prohibited.

As part of a package of consumer protection laws passed in 2022, the state specifically forbids the imposition of any “activation fees, retroactive fees, redemption fees, service fees, dormancy fees, latency fees, administrative fees, handling fees, access fees, periodic fees, renewal fees, re-loading fees, or any other fee of any kind.”

There is, however, one exception to the law. A gift card or gift certificate that is redeemable at multiple, unaffiliated merchants or service providers may charge a one-time activation fee, not to exceed $9. Cards purchased before the new laws were passed may still get around some of the restrictions.

“Gift cards are great since they provide both the giver and the receiver flexibility,” said Ava Torres of the Greater Mastic Beach Chamber of Commerce. “You don’t have to worry about getting somebody the wrong thing. I’m glad the state has very clear laws to protect people.” She noted that many retailers, credit unions, and companies offer gift card discounts making them an excellent way to shop.

Below are tips consumers should keep in mind when buying and using gift cards:

Research retailers before purchase. Verify the legitimacy of the seller. Check reviews and articles.

Check packaging. When buying a gift card, consumers should make sure the packaging and security seals are intact.

Use caution with third parties. Consumers should use caution when buying gift cards from third parties or online auctions, as it may be difficult to verify the dollar amount remaining.

Review the terms and conditions. Before purchasing, consumers should always review the terms and conditions to understand what their recourse is if the gift card is lost or stolen. Companies are required to post terms and conditions either on the card or in attached packaging.

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Beware of scammers. Scammers often seek payment in the form of gift cards, also known as prepaid cards. Government entities, utilities, and other reputable entities will never call you demanding an overdue bill or debt be paid with a gift card.

Consumers having difficulty redeeming a gift card are encouraged to file a complaint with the New York State Division of Consumer Protection. The office provides voluntary mediation, between the consumer and business, when the consumer has been unsuccessful at reaching a resolution on their own.

The Consumer Assistance Helpline, 1-800-697-1220, is available Monday to Friday from 8:30 a.m. to 4:30 p.m., excluding State Holidays. Consumer complaints can be filed at any time at www.dos.ny.gov/consumer-protection.