SB 250 - What you need to know about the new gift card law

Since the passage of SB 250 by Senator Corbett (D-San Leandro), the gift card bill that allows gift certificates with a cash value of less than $10 to be redeemed in cash by the customer, we’ve received a number of calls from members seeking clarification.

One of the biggest areas of confusion is whether the bill pertains to gift cards (or certificates) of “$10 or less” or those with a monetary value of “less than $10.” This has become a big issue for many restaurant operators selling gift cards or certificates in $10 increments. The language of the bill states, “This bill would allow any gift certificate with a cash value of less than $10 to be redeemed in cash.” According to the plain language of the bill, gift cards of less than $10 are mandated to be redeemable for cash. If a consumer has a $10 gift card, it is not automatically redeemable for cash, as the law seems to only apply if the gift card is less than $10. However, if the consumer first purchased something—making the card value less than $10—then they would be able to redeem the remaining value for cash.

Another area of confusion is whether the consumer has to purchase something to redeem cash. Again, according to the plain language of the bill, if the card’s cash value is less than $10 it seems the consumer does not have to purchase anything to redeem it for cash. For instance, if an operation sells a gift card for $5, even if it has never been used, the customer can seemingly redeem the entire value for cash without having to purchase anything.

It is important to note that different rules may apply to donated gift certificates; certain certificates purchased at a volume discount and certificates for perishable food products. It is also important to note that as with most new laws that have never been adjudicated, the interpretation and enforcement of the new law is largely determined by the enforcing agency/governing regulator. In this case, one of the governing agencies is the Department of Consumer Affairs (DCA). Should you have any questions, the DCA is accepting phone calls at 916.574.7800.

To read the bill language, please click here.

To download this article as a PDF for future use, click here.  

Source: Fine, Boggs & Perkins LLP (www.employerlawyers.com)