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Washington is the latest state to make it illegal to impose expiration dates and service or dormancy fees on gift certificates and gift cards.
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| Governor Locke |
The legislation, signed by Governor Gary Locke, includes some exceptions in charging fees such as if the company discloses the charges or if the amount remaining on the card is $5 or less. Consumers can demand that merchants cash out any unused amounts below $5.
Under the old law, retailers were required to turn over unused portions of gift cards after three years to the state's Revenue's Unclaimed Properties Division, which totaled about $2.7 million annually. The money often went into a general state fund since the division had difficulty returning the money to consumers, the state said.
The legislation also allows for some exceptions on banning expiration dates, for example, if the gift certificate or gift card is donated to a charitable organization for use in its fundraising purposes.
The law takes effect June 10, 2004, for gift certificates issued on or after July 1, 2005.
Last December, New York Senator Charles Schumer said he planned to propose federal legislation to ban monthly fees automatically deducted from gift cards. The legislation would be modeled after California and Massachusetts laws that ban such fees. Schumer said that last year New Yorkers would buy more than $1.7 billion in gift cards, and that nationwide the number would top $45 billion.
A growing number of states have either passed new laws regulating gift certificates and gift cards or tightened existing regulations. They include: Hawaii, New Hampshire, Rhode Island, Iowa, Connecticut and Maine.
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