California Gift Card Law: Civil Code § 1749.5 Rights and Rules

California gift card law bans expiration dates, prohibits most service and dormancy fees, and gives you the right to cash out any balance under $10 (rising to $15 in 2026). The rules live in California Civil Code § 1749.5 and cover physical gift cards, electronic gift cards, and paper gift certificates. They go well beyond what federal law requires.

Gift Cards Cannot Expire

California flatly bans the sale of any gift certificate that carries an expiration date.¹ A gift card sold in California is valid until you use it or replace it. There is no sunset, no “use by” window, and no point at which a retailer can declare the card dead. If the store is still operating, it owes you the full value whether you bought the card last month or seven years ago.

Any attempt to waive this right is void. A retailer cannot make you sign away these protections at the register or bury a waiver in the fine print.²

No Dormancy or Service Fees

Issuers cannot charge service fees or dormancy fees that nibble away at your balance over time.¹ A card sitting untouched in a drawer for three years should hold its original value when you finally pull it out.

One narrow exception exists. A dormancy fee is allowed only when every one of the following is true:¹

The remaining value is $5 or less each time the fee is charged.
The fee does not exceed $1 per month.
The card has had no activity for at least 24 consecutive months, counting purchases, reloads, and balance inquiries.
The card is reloadable.
A printed statement on the card itself, in at least 10-point font, discloses the fee amount, frequency, inactivity trigger, and when charging begins.

Miss one condition and the fee is illegal. Most standard retail gift cards are not reloadable and carry no such disclosure, so in practice the exception rarely applies to the cards you buy off a store rack.

Cash Back on Small Balances

Under § 1749.5(b)(2), any gift certificate with a remaining cash value under $10 must be redeemable in cash.¹ Recent legislation raises that threshold to $15 effective in 2026 and expands the statute to expressly include electronic gift cards. The right applies to both in-store and online transactions, so retailers with e-commerce operations need to provide an accessible way to request the cash payout digitally as well.

The statute does not limit this right to leftovers after a purchase. If someone gives you a $9 gift card, you can walk into the store and ask for cash without buying anything first. The more common scenario is the checkout leftover: you make a purchase, the register shows a few dollars remaining, and you ask the cashier to pay you the balance in cash rather than leaving it stranded on plastic.

“Cash” here means currency or a check. If you and the merchant both agree, it can also be an electronic funds transfer or a credit to a wireless account.¹

Which Cards Are Covered

California’s protections turn on how the statute defines “gift certificate.” Civil Code § 1749.45 includes gift cards and electronic gift cards, so the law covers the plastic card off a store rack and the digital code emailed for your birthday alike.³

Three categories of gift certificates can carry expiration dates under § 1749.5(d), as long as the date appears in capital letters in at least 10-point font on the front:¹

Certificates distributed through awards, loyalty, or promotional programs where you paid nothing for the card.
Certificates donated to nonprofits for fundraising or sold at a volume discount to employers, where the expiration date is no more than 30 days after the sale.
Gift certificates issued for perishable food products.

The common thread: these cards either cost you nothing or serve a narrow, time-sensitive purpose. A standard retail gift card you paid full price for does not fall into any of these categories.

General-use prepaid cards redeemable at multiple unaffiliated merchants sit outside the statute entirely, provided any expiration date is printed on the card.³ That means a Visa, Mastercard, Discover, or American Express gift card bought at a pharmacy is governed by federal rules instead, not California’s.

Your Balance Is Trust Property

California goes further than most states in one important respect. Under Civil Code § 1749.6, the money on a gift certificate is legally trust property belonging to you, the holder, not to the business that issued it. The retailer is holding your money on your behalf until you spend it.²

That designation has real weight in bankruptcy. Section 1749.6(b) requires a bankrupt issuer to continue honoring gift certificates issued before the filing, because the balance is trust property. Terms on the card cannot override this or declare the card invalid due to a bankruptcy.² Outside California, courts have generally treated gift card holders as unsecured creditors who recover little or nothing when a retailer liquidates. A California retailer in Chapter 11 reorganization cannot unilaterally stop accepting cards the way retailers in other states sometimes do.

The practical outcome still depends on whether the bankrupt company has assets. A trust designation on paper cannot conjure funds that no longer exist. But the legal footing is far stronger than what federal bankruptcy law provides on its own.

How California Compares to Federal Law

The federal Credit CARD Act sets a national floor, and California’s rules sit well above it in every category.

Federally, a gift card cannot expire sooner than five years after activation.⁴ California bans expiration dates outright. Federal law permits dormancy and inactivity fees after just 12 months of non-use, provided the policy is disclosed.⁵ California bans those fees except in the narrow reloadable-card scenario above. And federal law contains no cash-back requirement at all for small balances,⁶ while California requires it.

The distinction matters most for those general-use prepaid cards. A Visa gift card bought in California can legally expire after five years and can legally charge dormancy fees after one year of inactivity, because only the weaker federal rules apply. Read the fee disclosures before buying one.

Lost, Stolen, or Scammed Cards

Neither California law nor federal law gives you strong protection when a gift card is lost or stolen. Unlike a credit card, where federal law caps your liability for unauthorized charges, a missing gift card is closer to missing cash. Recovering the balance is difficult and not guaranteed.⁵

Your best move is to contact the issuer immediately and ask for a replacement or refund. Many retailers will look up the balance if you have the original receipt and card number, and some will issue a replacement. Others charge a fee or refuse entirely. No California statute compels replacement of a lost card. Registering the card online when possible, or keeping a photo of both sides of the card along with the receipt, creates the record you would need to freeze the balance if the card disappeared.

Gift card scams are a separate and growing problem. Scammers tamper with cards on store racks, copying the number and PIN before resealing the packaging, then drain the balance as soon as someone activates the card at checkout. Other scams involve callers impersonating a government agency or utility and demanding payment by gift card. If you have already given a card number or PIN to a scammer, the Federal Trade Commission recommends three steps: report the scam to the gift card company immediately, ask for your money back, and file a report at ReportFraud.ftc.gov.⁷ Some issuers refund victims voluntarily. Keep copies of the card, the receipt, and any communications with the scammer.

Enforcing Your Rights

When a merchant refuses to honor a gift card balance or declines your cash-back request, start by filing a consumer complaint with the California Attorney General’s Office through the online consumer complaint portal.⁸ Include the merchant’s name, the gift card details, your receipt, and a written account of what happened. The Attorney General’s office tracks patterns and may take enforcement action against repeat offenders.

If you want your money back rather than a state investigation, small claims court is the more direct path. California’s small claims filing fees track the amount claimed:⁹

$1,500 or less: $30 filing fee
$1,500.01 to $5,000: $50 filing fee
$5,000.01 to $12,500: $75 filing fee

Most gift card disputes involve small dollar amounts, so you would likely pay the $30 fee. Bring the card, your purchase receipt, and any evidence of the refusal: a written response, the name of the employee who turned you down, or a dated note you wrote after the encounter. Gift card cases tend to be straightforward in small claims because the statute is clear and the merchant’s obligation is not ambiguous. The harder part is often just knowing the right exists.

1
California Legislative Information. California Code Civil Code Section 1749.5
2
Justia Law. California Code Civil Code Title 1.4a – Gift Certificates
3
California Legislative Information. California Code Civil Code Section 1749.45
4
GovInfo. 15 USC 1693l-1 – General-Use Prepaid Cards, Gift Certificates, and Store Gift Cards
5
Federal Deposit Insurance Corporation. What You Should Know About Gift Cards
6
eCFR. 12 CFR 1005.20 – Requirements for Gift Cards and Gift Certificates
7
Federal Trade Commission. Avoiding and Reporting Gift Card Scams
8
State of California – Department of Justice – Office of the Attorney General. Consumer Complaint Against a Business or Company
9
Superior Court of California. Statewide Civil Fee Schedule Effective January 1, 2026