Since I'm not a lawyer I can't have the final say on what the law means, but the term gift card generally encompasses things like gift certificates, as well.

That being said, the law in Oregon didn't go into effect until mid-2007, so items sold before that date do not fall under the new law. You can ask the retailer if they will honor it anyway to keep you as a customer, but as for recourse I don't have further advice for you. Good luck!

I received a gift "certificate" from Musician's Friend, which is an online store, from my son way back in 8-2006. I want to redeem it, but they are saying it is expired (as stated on their website–expiration after one year). This business is based in Oregon. Do I have any recourse? It's hard to find info regarding this for the state of Oregon. They have Oregon info on gift "cards" but not "certificates." My son should at least get his money back, since I didn't use it. Do I have to wait five years until the state receives it and then file a claim. I will, if I have to. I can't remember to use a gift certificate, but I have a memory like an elephant when I feel I've been cheated

Jerrie

Currently, I have Colorado marked as a state that doesn't not regulate the expiration dates of gift certificates. My quick research tells me this is still correct. However, I am not a licensed attorney in the State of Colorado, and cannot give you definitive advice on whether this is actually the situation in Colorado. And, by the way, I don't have the best legal research tools at my disposal. So, I recommend you contact an attorney in your state, and ask them to spend 15 minutes doing the research for you. Don't let them bill you more than the 15 minutes!

Dawn, thanks for the great comments, and glad to hear you had a great holiday!

Thank you again, so very much for your comments Larry! It is most appreciated.

I continue to just love SpaBoom! So nice to know that we are receiving purchases when I sleep and not to mention that it allowed us to not be open 24/7 this year during the holidays and we actually had some extended time with our families. For that alone, I am ever so grateful.

Sincere Regards,
Dawn

From what I've found, there is no law on the books in the state of Colorado that require GC's to be valid for a certain period of time. If you have time, could you verify that for me?

Thanks!

I'm sorry, but there are a number of complex issues with what you're bringing up, and you really need to speak with a consumer affairs / deceptive trade practices attorney in the state you're located in. We refrain from giving specific legal advise in this blog.

Let me give you some background to your issue: It really concerns contracts. What were the terms of service that applied to your transaction when you made, then canceled, your reservation? Once the appropriate terms of service are applied, then they need to be examined to understand whether (1) they truly applied to your transaction (and if not, what are the proper terms of service to apply), and (2) what they said and were they followed correctly.

If there were applicable terms of service, and they were followed correctly, then it is conceivable that a "rain-check" would be an appropriate remuneration for your cancellation, and it could conceivably have a deadline placed on its redemption.

Don't get hung-up on the terms "gift certificate" and "rain-check." What's important, is the circumstances in which it was obtained. In the case of a "gift certificate," it's a specific amount given to a business with the intent of redeeming it for future product or service. In your case, it appears the "rain-check" was given as a form of settlement between you and the business, which could have any one of a number of terms and conditions associated with/attached to it.

I know this really doesn't help you. Sorry. An attorney in your state can definitely help (if the amount is worth it).

Larry.

Excellent comments. What Massachusetts is proposing is exempting GC's from their escheatment laws (look up Uniform Unclaimed Property Act) until after the 7 years expiration date. I have a number of thoughts on this, and if you have the ability to influence your legislators, I would HIGHLY advise you to do so.

First, they should exempt GC's with longer (or no) expiration dates. That is, they should require an organization to turn in the funds, only after a GC has expired. If there is no expiration date, then an organization shouldn't ever be required to turn in the funds.

Second, the state should allow for the organization to subtract out costs, before escheatment. Some states just assume a 40% cost structure, and require 60% of the face value to be turned in.

Third, if your state is at all sympathetic to small business, I would encourage the state to put some floor in place, before a business is required to turn in such funds (i.e. business can keep the first $2m in GC's per year, rest turned into the state).

In reference to my third point, it seems many states put in bad laws that hurt small businesses, because the legislators read in the Wall Street Journal how Best Buy and other nationwide retailers are making billions. They don't stop to think about the small businesses in their state (i.e. the spas and salons, for example), that are barely able to keep their heads above water and don't appreciate how important GC's are to their survival. Your state legislators need to be educated on the impact of GC's to your small business, and the impact of your small business on your communities.

Finally, let me say thank you for signing up with SpaBoom. I'm glad you find our service valuable!

Larry.

I have a few comments about the postings above.

1. Don't forget we are all in business to make a profit (along with our passion for the industry and care for clients, of course). In lieu of this, we need to keep in mind the cost of providing that certificate or gift card, wrapping, boxes, fees for processing, bag, ribbon… (SpaBoom aside… the cost and value with SpaBoom is phenomenal). The purchase of a certificate today is not worth the same amount seven years later (e.g. gas is not the same price as it was seven years ago) so we all need to keep this in mind.
2. Selling gift cards by dollar value is how we thought we should proceed considering the law. After reviewing the postings I am analyzing our decision since the name of the treatment, services and packages would be more advantageous to us seven years later to allow for some flexibility in the redemption.
3. On our gift cards we have clearly stated the same that SpaBoom has outlined about lost or stolen cards. We state that if lost or stolen we are not responsible. We do allow for clients to give them to another person if they wish.
   If someone could comment about when a client has lost heir certificate what their policy has been I would be grateful for another point of view other than mine. Our system is much like that of a Starbucks or Borders… we give the card to the purchaser and who they give it to is not recorded.

I have always looked at the whole Gift Card system as a marketing expense.

Thank you for having SpaBoom. We have done very well this first month!

Happy prosperous Holidays to all!

Good suggestion about always accepting GC's, even those that are expired. I've heard from many a spa owner who say the same thing: Accepting expired gift certificates is a wonderful way to inspire goodwill and earn new customers. I've even talked to one spa who started accepting gift certificates (at a somewhat reduced rate) of a competing spa that went out of business. He said when you factor in the cost of obtaining new customers, it was a great program to earn goodwill and valuable customers.

Dollar amount versus service-based GC's in the eyes of GC laws… what an EXCELLENT question, Connie!

Unfortunately, the law makes absolutely no distinction between dollar-based and service-based GC's. There are a few laws out there, that reference "face value," but the law is completely untested as to whether service-based GC's would be excluded. With apologies to other attorneys out there who may disagree with me (for example, SpaFinder probably has the best GC attorney I've ever met, Neil Kurlander… go easy on me, Neil!), I believe "face value" would be interpreted to simply mean "value" in the eyes of the courts.

So, anyways, this means you need to keep track of the "value" of the GC, no matter what it says on its face, and no matter what the service says. In other words, when you sell a service-based gift certificate, what you're really selling is "This Wonderful Service, or an equivalently priced service at the time of presentment." Therefore, you do NOT have to provide a service at 50% of today's price 15 years from now. Under every state law that I'm aware of, you can "apply the funds previously paid" to the new service being rendered.

I hope I'm being clear here.

Just as an aside, I'm the one responsible for writing SpaBoom's terms of service that defaults with every SpaBoom account. One important provision reads, under the heading Redeeming Gift Certificates (first bullet):

Check out SpaDemo's Gift Certificate Terms of Service for an example of what this looks like.

We experimented with expiration dates from 6 months to two years and have found we have the highest redemption rate on Gift Certificates that expire in 6 months people do not lose or forget about them.

On a side note we have never turned anyone away who has an expired gift certificate we state it is only valid the amount the GC was sold. Most people are so grateful you will still honor the gift certificate that many of them have become new loyal clients. The accounting is a pain but since we do not get a lot of requests it is no big deal.

My question is states with no expiration are all Gift Certificates for dollar amount only??? Our clients like the fact they are giving a day at the spa not just a dollar amount. Otherwise do you have to honor a 15 year old gift certificate for a one hour massage sold at only 50% of todays price?

I think it is the big box stores who have ruined the idea of gift certificates. There is nothing more frustrating than getting a gift card with no expiration date on it using two months later, and you get to the cash register and find out of the $50.00 there is only $5 left after the user fee, inactivity fee, not rubbing your belly and patting your head at the same time fee… etc… etc…

Ruben, good catch! Only a handful of states still permit maintenance fees, including New York, provided (in NY's case) the maintenance fee is "conspicuously disclosed." Most of the GC laws out there specifically prohibit maintenance fees, but if you can use them, it's another way to reduce the liability of outstanding gift certificates. SpaBoom does not support maintenance fees, by the way, for those who want to use SpaBoom's gift certificate management capability; and unless you create your own custom GC designs, your SpaBoom instant gift certificates will not have a conspicuous disclosure regarding maintenance fees.

Thank you, and Happy Holidays to All!

It's rather confusing.

Also, in the case that the business closes due to bankruptcy, the customers holding gift certificates would have to wait in line with other creditors in order to have their claim satisfied.

You have some great questions, and to get the very best answer that applies to your financial situation and the legal requirements of your state, you really do need to talk to a CPA registered in your state.

I'll give you some general guidelines, but they will vary depending on your specific circumstances, and my answers won't apply to all states (i.e. for example, Louisiana really screws its businesses by preventing them from using an expiration date of less than 5 years, but its escheatment laws require businesses to turn in unredeemed gift certificate cash after 3 years).

So, generally speaking, gift certificates that do not expire remain on the books as a liability. Businesses selling gift certificates that do not expire would benefit by working hard to get people to redeem their outstanding gift certificates.

Any business that has gift certificate liability on its books potentially has a problem, when it is either selling the business or closing its doors. Unredeemed gift certificates NEVER "automatically expire" when a business sells or closes its doors. For the sale of a business:

• The gift certificate liability becomes the subject of a negotiations between the buyer and seller.
• Buyer usually assumes a high redemption rate, and desires to have the final sales price of the business discounted accordingly (unless the sale is an asset sale). The seller assumes a low redemption rate.
• If the seller doesn't keep great records of the gift certificate liability, the buyer will usually estimate the liability (and will - surprise - guesstimate high).
• Buyers are encouraged, if they wish to maintain the operations of the business - especially in the same location - to honor the old gift certificates. Consumers don't care or understand what "under new management" means, and will sometimes create issues for the new management, if they don't accept old gift certificates.
• Of course, if the sale of the business is an asset purchase, the operations move elsewhere, or the name changes with a corresponding change in services, all bets are off.

If the business closes:

• The business owners are "on the hook" for unredeemed gift certificates.
• Depending on the state you are in, you should follow that state's escheatment laws.
• If you don't have an escheatment issue, you should negotiate with another business to take on the gift certificate liability. That is, find another spa to honor your gift certificates.
• Worst case, refund the gift certificates as you are approached by consumers.
• The law here varies dramatically from state-to-state and situation-to-situation. You will need to consult with an attorney who specializes in this area of law, to make sure you close your doors properly.

Some common misunderstandings:

• Gift certificates do not automatically expire. In fact, the opposite is generally true: If a gift certificate does not have an expiration date, most states will presume the gift certificate never expires.
• You need to place the money obtained from gift certificate sales in an escrow account. Definitely not true. You're free to use the money as you see fit. You just need to keep track of your sales and account for the sales properly.
• Cash from gift certificates is pure profit. Nope. The cash from gift certificates becomes a liability to your business, and you are allowed to recognize it once your gift certificates are either redeemed or they expire.

Long-winded response. Great question!