It’s the Law: Look a gift card in the mouth

How many of you gave or received a gift card this past holiday season?
Gift cards have become extremely popular. I salivate every Christmas, because I know that my wife, Renae, who is a teacher, will receive umpteen gift cards from her cheery students. I know that if I’m really nice, Renae just might buy me a grande-decaffeinated-white-chocolate-mocha-no-whip-please with one of the myriad Starbucks Coffee cards she gets.
Some sources say that Americans will spend $100 billion on gift cards this year. When you walk into the Safeway on Mount Hermon Road in Scotts Valley, you will encounter an entire wall of the little plastic slabs.
Quite a few years ago, I was given a $15 Blockbuster gift card. When I tried to rent a movie with it a year or two later, the store employee mumbled that it didn’t work. Not one person at that store had any idea how to redeem the card, nor did they particularly care. And why should they? The issuer gets free use of the money, and, although estimates vary, most sources say about 10 percent of all gift cards are never redeemed. That’s a pretty sweet deal for the retailers — interest-free loans and, in most states, windfall profits.
I decided it wasn’t worth my time to chase down why the $15 card wasn’t valid, but my guess is that it had expired. This frustration was felt by many a Californian, so the Legislature passed laws to protect us from gift card abuse. Here are the chief provisions of California gift card law:
• The card or certificate cannot expire, and there can be no fees, with one exception: a $1 per month fee can be charged only when the card has a balance of $5 or less, the card has been unused for 24 months, and the card is reloadable.
• Any card with a cash value of $10 or less may be redeemed for cash.
If you’re interested in all the details, visit the following Web site from the California Department of Consumer Affairs: www.dca.ca.gov/publications/legal_guides/s-11.shtml.
The foregoing might sound well and good, but there is one enormous loophole in the gift card law: It doesn’t apply to cards that can be used with “multiple unaffiliated sellers of goods or services.” People commonly refer to these cards as Visa cards, but all of the major credit card companies issue them.
True, these little devils are handy, because they can be used just about anywhere, but never forget that credit card companies are in the business of making money — your money — so you want to check the terms of any general-purpose gift card very carefully.
Meanwhile, there are ways to get more for your money with gift cards. Several Web sites sell gift cards at substantial discounts. Check out www.giftcardgranny.com or www.giftcard.com. There are quite a few large retailers that offer attractive discounts. I recently saw a $500 iTunes gift card selling for $279, a 44.2 percent discount.
There are not-so-great deals, too. A $500 Exxon card was selling for $495.
A number of the sellers are on eBay, so check out their merchant ratings to make sure they have a good history. There are a few reports of scams involving discount gift cards.
Finally, what do you do with a gift card that has a couple of bucks left on it? Under the law, you can trudge on down to the retailer and demand your buck. Don’t, however, throw it out. If nothing else, give it to www.giftcardgiver.com. This charitable organization stockpiles cards with just a few dollars left on them, combines them into higher-value gift cards, and then donates them to the needy.
With $10 billion in unredeemed gift cards floating around, who better to get some of this pie –— large retailers or charities? Happy post-holidays!
• Gary Redenbacher of Scotts Valley is an attorney in private practice. Contact him at ga**@re*********.com.