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Vermont Law on Gift Cards and Certificates

Prepared by the Vermont Attorney General’s Office August 3, 2012

On May 18, 2012, Vermont law on gift certificates and gift cards was amended to be compatible with federal law.  The major changes from prior Vermont law are: 
  • Gift cards/certificates must be valid for at least five years (Vermont used to require three years).
  • Gift cards/certificates for a food product are no longer exempt.
  • A promotional gift card/certificate (often they are for food), can have an expiration date less than five years for the promotional portion of the gift certificate; the paid value cannot expire in less than five years. 
Note:  Many Vermonters are not aware that under Vermont law since 2005, a holder of a gift card/certificate is entitled to the unused portion of the certificate even after the expiration date. The law at Title 8, Section 2702 of the Vermont Statutes Annotated, provides:

Following the expiration date of the gift card/certificate, the unused portion of the gift certificate shall be returned to the holder of the gift card/certificate, if requested. 

For more detail on the Vermont law on gift cards and certificates, please see the following Questions and Answers:
  1. What is a gift certificate?
  2. How long before a gift certificate can expire?
  3. How must the expiration date be disclosed?
  4. What if no expiration date is disclosed?
  5. Must a merchant return the unused portion of a gift certificate upon expiration?
  6. Can a gift certificate be redeemed for cash?
  7. What fees may be charged?
  8. What is a loyalty, award, or promotional gift certificate?
  9. What are the rules for a loyalty, award or promotional gift certificate?
  10. Is a merchant required to respond to a balance inquiry?
  11. What are the penalties for violating the Vermont gift certificate law?
  12. May a consumer bring a private right of action under the Vermont gift certificate law?
  13. Are there exemptions to these rules?

1. What is a gift certificate?

Vermont’s definition of a gift certificate is very broad, and includes both traditional paper gift certificates and the increasingly common plastic gift cards similar to credit cards.  The Vermont definition of a gift certificate is “a record evidencing a promise made for consideration by the seller or issuer of the record that money, goods, or services will be provided to the holder of the record for the value shown in the record.”

For example, a gift certificate includes:
  • An electronic gift card
  • A stored-value card
  • A card issued by a retailer or group of retailers
  • A paper gift certificate
  • Any similar record or card.
A gift certificate does not include:
  • An access device such as a debit card, of a bank or credit union.
  • A code, or other means of access to a consumer's account that may be used to initiate a withdrawal or to initiate an electronic funds transfer from the consumer's account.
  • A card for services that is not tied to a specific cash value, i.e., a yoga or fitness punch card that can “only be redeemed for yoga services and not for some monetary value.”  See Hughes v. CorePower Yoga, LLC, 2013 WL 1314456 (D. Minn. 2013) (finding that a class pack of 10 yoga classes was not a “gift card” because the class pack was “unaffected by changes in price” and it “allow[s] the customer to participate in the yoga course regardless of the value of the class at the time the customer redeems his Class Pack.”  The court also noted that gift cards would not include monthly passes to a parking garage, admission passes to theme parks, physical training packages, music lessons, and bus passes good for a certain number of rides).

2. How long before a gift certificate can expire?

A gift certificate cannot expire until at least 5 years after of the date of issuance or after the date funds were last loaded onto the gift certificate, whichever is later.

Also, as noted above, the issuer of a gift certificate must return any unused funds even after the expiration date if the holder of the gift certificate requests them. 

3. How must the expiration date be disclosed?

In most instances, both the date of issuance and the expiration date must be clearly identified on the face of the gift certificate.

For an electronic card with a stored dollar value, the expiration date must either (1) be clearly printed upon a sales receipt transferred to the purchaser at the time the transaction is completed, or (2) made available to the purchaser or holder of the electronic card through means of an internet site or a toll free information telephone line.

4. What if no expiration date is disclosed?

A gift certificate not clearly marked with an expiration date or for which the expiration date is not otherwise made available shall be deemed to have no expiration date.

5. Must a merchant return the unused portion of a gift certificate upon expiration?

Following the expiration date of the gift certificate, the unused portion of the paid value of the gift certificate shall be returned to the holder of the gift certificate, if requested.

6. Can a gift certificate be redeemed for cash?

If the remaining value of a gift certificate is less than $1.00 or the certificate has expired, the gift certificate shall be redeemable in cash for its remaining value if the holder requests it.

7. What fees may be charged?

Vermont law prohibits dormancy fees, latency fees, issuance fees, redemption fees, or any other administrative fees or service charges in connection with a gift certificate. 

However, a money transmitter licensed by the Department of Federal Regulation, a financial institution, or a credit union may charge a one-time fee upon the issuance of a stored-value card equal to the lesser of (a) 10 percent of the face amount purchased or added to the stored-value card; or (b) $10.00.

8. What is a loyalty, award, or promotional gift certificate?

The definition of a loyalty, award or promotional gift certificate is “a gift certificate that is issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in connection with a loyalty, award, or promotional program and that is redeemable upon presentation to one or more merchants for goods or services or that is usable at automated teller machines.”

The following are examples of loyalty, award or promotional gift certificates:
  • Loyalty:  A customer who has spent over $500 in a given time period receives card for $50 to be used at any time. 
  • Award: Employer gives gift card for $50 to be redeemed with a local merchant to employees with exceptional job performance.
  • Promotional:  New bakery charges $30 for gift cards worth $50.  (The paid value of the card is $30; the promotional value is $20.)
  • Loyalty and promotional:  A customer who has spent over $500 in a given time period receives a card for $50 to be used by January 1. 

9. What are the rules for a loyalty, award or promotional gift certificate?

A loyalty, award, or promotional gift certificate shall clearly and legibly set forth the following disclosures, as applicable:

On the front of the gift certificate:
  • Indication that the gift certificate is issued for loyalty, award, or promotional purposes; and
  • The expiration date of the gift certificate, including the expiration dates for the paid value of the gift certificate, if any, and the promotional value of the gift certificate, if any.
On or with the gift certificate:
The amount of any fees allowed by law that may be imposed in connection with the gift certificate and the conditions under which they may be imposed.  See Question 7 for fees that may be charged.

On the gift certificate (front or back):
If any fee is assessed against the gift certificate, a toll-free telephone number and, if one is maintained, a website address that a consumer may use to obtain fee information.

10. Is a merchant required to respond to a balance inquiry?

Yes, the issuer of the gift certificate, at the holder's request, shall inform the holder of the unused balance remaining on the gift certificate as well as the expiration date of the gift certificate.

11. What are the penalties for violating the Vermont gift certificate law?

A penalty of not more than $1,000.00 per violation may be imposed upon any person who violates any provision of  8 V.S.A. §§ 2701-2711, any applicable rule, or any order issued by the Commissioner of the Department of Financial Regulation, plus the state's costs and expenses for the investigation and prosecution of the matter, including attorney's fees.

The Commissioner may order any person to make restitution to any person as a result of a violation of this law.

Any gift certificate that contains any provision in violation of this chapter is contrary to public policy, and is void and unenforceable against the holder of the gift certificate.

12. May a consumer bring a private right of action under the Vermont gift certificate law?

Yes.

13. Are there exemptions to these rules?

Yes, the rules outlined above do not apply to any of the following:
  • A loyalty, award, or promotional gift certificate issued pursuant to an awards or loyalty program where no money or other thing of value is given in exchange for the gift certificate, provided that the certificate complies with the requirements outlined at Question 9 above. For example, gift certificates given out by a store to persons walking through the store (but not necessarily buying anything) need not have a five year expiration date. 
  • The promotional value of a gift certificate issued in exchange for paid value, provided that the gift certificate complies with the requirements outlined at Questions 2, 3, 7 and 9 above.
  • A gift certificate donated to a charitable organization and used for fundraising activities of a charitable organization, without any money or other thing of value being given in exchange for the gift certificate by the charitable organization, provided that the expiration date is clearly and legibly printed on the gift certificate.
  • Prepaid calling cards issued solely to provide an access number and authorization code for prepaid calling services.
  • A season pass, a discount ski card, or a gift certificate sold for admission to any seasonal recreational activity.
  • A payroll card account issued pursuant to and in full compliance with 21 V.S.A. § 342(c).
  • A card for services that is not tied to a specific cash value, i.e., a yoga or fitness punch card that can “only be redeemed for yoga services and not for some monetary value.”  See Hughes v. CorePower Yoga, LLC, 2013 WL 1314456 (D. Minn. 2013) (finding that a class pack of 10 yoga classes was not a “gift card” because the class pack was “unaffected by changes in price” and it “allow[s] the customer to participate in the yoga course regardless of the value of the class at the time the customer redeems his Class Pack.”  The court also noted that gift cards would not include monthly passes to a parking garage, admission passes to theme parks, physical training packages, music lessons, and bus passes good for a certain number of rides).

Last modified April 06 2017 01:56 PM

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