The New Gift Card Law — How it Affects Your Spa
August 23rd, 2010 • Posted by Andrea Feucht • Permalink
How the new rules for gift card sales affect you
The new Credit CARD Act took effect on August 22nd, 2010, changing the rules (radically, in some states) for gift card and certificate sales in the United States. Despite what you may have heard it will have a profound effect on most small businesses who sell gift cards or gift certificates. Therefore, there are things you need to know and to to comply with the applicable law.
We have taken much of the guesswork out by modifying the default expiration dates of new Instant Gift Certificate sales in your SpaBoom account. The new Federal minimum for dollar amount expiry is 5 years, unless your state's law specifies a longer period. Discounted and promotional GCs follow some different rules, so we have taken that into consideration as well.
Here's how your settings have changed (you can check these in your GC Types list in Setup):
- Dollar amount GCs default to either 5 years or your state's minimum if it is more than 5 years
- Named Service GCs, Free GCs, and Discounted GCs default to 12 months.
- An additional setting, called Funds for Service GCs, is also defaulted to 12 months.What this means is that you can sell a gift certificate for a facial worth $30 today, but that price could go up in the future. You can leave your Named Service GC expiration at one year, but set Funds for Service GCs to 3 years, allowing the recipient to redeem the GC for the facial for the first year, or for $30 worth of services for two more years after that. Pretty neat — you have much less chance of losing a potential client, nor do you have to take a loss on the value of a service.
Questions? We've studied and analyzed this for you (and have wrote a complete explanation of how the CARD Act affects gift card sales) but keep in mind we cannot serve as your lawyer. Give us a call if you have questions.