California prohibits expiration dates on most gift certificates entirely. Remaining balances of less than $10 must be redeemed in cash on customer request. Service fees are heavily restricted. This is one of the most consumer-protective regimes in the United States.
Federal context
Under the federal Credit CARD Act of 2009 and its implementing Regulation E (12 CFR 1005.20), gift certificates and most general-use and store gift cards sold in the United States must remain valid for at least five years from the date of issuance or last load. Federal law also restricts dormancy, inactivity, and service fees: a fee can generally be charged only if the card has been inactive for at least 12 months, the fee is disclosed, and no more than one fee is charged per month. State laws may add stronger consumer protections on top of this federal floor.
For a deeper federal explainer, see our CARD Act overview.
Expiration rules in California
California Civil Code §1749.5 broadly prohibits expiration dates on gift certificates sold or issued in California. There are narrow statutory exceptions — for example, certificates given away free as part of a promotion, certificates issued for a food product (such as a meal voucher) where the issuer has clearly stated terms, and certain reward or loyalty program credits.
If a merchant prints an expiration date in violation of §1749.5, the expiration is generally unenforceable. The certificate remains redeemable indefinitely.
This is the strictest expiration regime in the United States. California gift certificate operators should treat the certificate as a permanent obligation.
Dormancy and service fees in California
California Civil Code §1749.5(e) prohibits service fees on gift certificates with one narrow exception: a dormancy fee can be charged only if (a) the certificate had a remaining value of $5 or less at the time the fee is charged, (b) the fee is no more than $1 per month, (c) the certificate has been inactive for at least 24 consecutive months, and (d) the fee structure is clearly disclosed.
In practice, this exception is so narrow that most California merchants charge no fees at all. The administrative overhead of tracking the conditions usually exceeds the fee revenue.
Cash redemption for small balances
California Civil Code §1749.5(b)(2) requires merchants to redeem any gift certificate with a remaining cash value of less than $10 for cash upon request of the holder. This applies to single-merchant gift certificates and is a hard rule, not a courtesy.
Operationally: if a customer redeems a $50 California gift certificate for a $42 service, the remaining $8 balance must be returned in cash if the customer asks. The merchant cannot insist on a store credit, future visit, or new gift card.
This rule is one of the most distinctive features of California gift certificate law and is regularly cited in consumer protection enforcement.
Disclosure requirements
Beyond the federal Regulation E disclosures, California operators should clearly state on the certificate that there is no expiration and that the small-balance cash redemption rule applies.
POS-printed receipts at issuance should match the certificate's stated terms.
Unclaimed property and escheatment
California historically takes a different approach to gift certificates than to other unclaimed property: because gift certificates issued by California businesses cannot expire, the underlying liability does not extinguish via dormancy.
Single-merchant gift certificates sold in California are generally not subject to escheat to the State Controller's Office under the standard unclaimed property framework, because they remain redeemable indefinitely.
Open-loop or bank-issued gift cards have a different treatment and may have reportable balances after defined dormancy periods.
Enforcement and penalties
California consumer protection enforcement is robust. The Attorney General's Office, district attorneys, and the Department of Consumer Affairs can all bring actions. California also allows private rights of action for violations of certain consumer protection statutes, exposing non-compliant operators to class action risk.
Civil Code §1749.6 establishes penalties and customer remedies for violations of the gift certificate statute. Repeat violations have triggered six-figure settlements in past enforcement actions.
Recent updates
California's gift certificate framework has remained substantively stable in recent years. Operators should still monitor amendments to Civil Code §1749 and related provisions, as the legislature has historically expanded consumer protections in this area.
Last reviewed: May 24, 2026. Statutes change. Verify the current text of the cited statute before acting on this summary.
California compliance checklist
A short operational checklist for selling gift certificates in California. Adapt with counsel before publishing your final policy.
- Print 'No expiration date' clearly on every gift certificate sold in California.
- Train all front-line staff on the under-$10 cash redemption rule.
- Configure POS to automatically prompt cash redemption when balance falls under $10.
- Do not charge service or dormancy fees on standard gift certificates.
- Post the gift certificate policy at the point of sale and on the website.
- Maintain redemption records indefinitely — certificates do not expire.
- Consult California counsel before implementing any expiration or fee on a promotional or food-product certificate.
Frequently asked questions about California gift card law
Can I put any expiration date on a gift certificate in California?
Generally no. The statutory exceptions are narrow (promotional giveaways, food vouchers with specific characteristics, loyalty credits). If you're a typical retail or service business selling a gift certificate, no expiration is permitted.
Do I have to return cash for a $9.99 balance?
Yes. If the customer requests it, California law requires cash redemption of any single-merchant gift certificate balance less than $10. The customer does not have to use the remaining value for a future purchase.
What about open-loop Visa/Mastercard gift cards sold in California?
Open-loop bank-issued gift cards have a different regulatory treatment and may have expiration and fee features that differ from single-merchant rules. Consult specialized counsel for open-loop programs.
Does the no-expiration rule apply if I move my business out of California?
Certificates already sold to California consumers retain their legal protections. Always honor outstanding certificates under the terms that applied at the time of sale.
Can I require the certificate to be presented physically?
You can require proof of the certificate (number, QR code, digital wallet entry). What you cannot do is use 'lost certificate' as an excuse to deny redemption if the customer provides reasonable proof.
Related legal basics
- Do Gift Certificates Expire? — A practical overview of federal and state rules on gift certificate expiration, written in plain English.
- Can You Charge Fees on Gift Certificates? — Federal and state rules on inactivity, dormancy, and service fees for gift cards.
- Gift Certificate vs. Gift Card — Legal and practical differences between gift certificates and gift cards in the US.