US Loyalty Currency Expiry and Dormancy Laws

Goals

To gain an understanding of the current loyalty currency expiry and dormancy laws in USA by learning what the current loyalty currency expiry and dormancy laws in USA are, and if they differ by state and what the current laws for expiry of loyalty gift certificates purchased using loyalty currency are. Also, by indentifying some examples of practices/policies that at least 5 major retailers in the US that have loyalty programs have used for loyalty expiry or account dormancy, and by finding some recent news articles or press releases in the US related to the expiry of loyalty points and/or gift cards.

Early Findings

  • Per NOLO, the Federal Credit CARD Act of 2009 states that gift certificates and store gift cards can't expire for five years. However, issuers can still charge an "inactivity fee" if the card has not been used within twelve months. (15 U.S.C. § 1693l–1).
  • While some states strictly follow the Federal Credit Card Act of 2009, others make their own rules. State laws supersede federal law only when they provide more protection for consumers than the federal laws do. For example, California prohibits store gift certificates and gift cards from having an expiration date or dormancy fees (except under certain circumstances). Additionally, gift cards with a remaining balance of less than $10, can be redeemed for cash. (Cal. Civil Code § 1749.5).
  • This chart provided by the National Conference of State Legislatures (NCSL) provides summaries of the gift card laws of each US state as of 2016. This is the most recent year for which this information has been provided.
  • Per the FDIC, the Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act provides the same protections of the Federal Credit Card Act of 2009. This act states that these rules cover both merchant (retailer) and bank gift cards.
  • Victoria's Secret's terms and conditions for gift cards mirror federal law. According to their website, gift cards have no expiration date, and cards with a balance under $10 may be redeemed for cash. The site does not mention an applicable "inactivity fee." Additionally, lost cards will be replaced and maintain the existing balance if the cardholder is able to provide the card number.
Rules and Statutes Concerning Unclaimed Property
  • Rules and statutes governing when businesses should escheat gift, payroll, loyalty, and other stored-value cards vary by state. Ten states have made changes to these rules and statues during the last three years, while other states are considering making changes.
  • Most of the new laws, particularly those governing gift cards, are "part of broader reforms to unclaimed property laws being driven by the 2016 Revised Uniform Unclaimed Property Act (“2016 Uniform Act”)." Unclaimed property rules for closed-loop gift cards can be found here.
Summary of the Findings Relevant to the Goals
  • Our first hour of research was able to provide the main provisions of the current loyalty currency expiry and dormancy laws in the USA. We were also able to determine that these laws form the basis of the laws used by most states but that many states extend the protections further and were able to provide a source that summarizes the differences between the. Federal Credit CARD Act of 2009 and the laws adopted by individual states. We were able to provide the policies governing gift cards used by one major US retailer. We propose continued research to provide the remaining information.

Proposed next steps:

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