We love the convenience of gift cards, but there's always been a niggling drawback. What do you do when your gift card has just two or three dollars left on it? That probably won't cover another purchase and retailers have never been required to give it back to you in cash, until now.
The National Retail Federation says Americans will spend a record $26 billion on gift cards this year, and two-thirds of us will buy at least one this holiday season. And when we give them as gifts, they are often only partially used.
"You get a gift card, if you remember to use it, you may not find something for the precise full amount," says Richard Holober, the executive director of the California Consumer Federation.
Holober says a lot of gift cards are left with real money not being used. Small amounts left over often go to waste and in fact, retailers are allowed to start drawing down the money once a card is left with less than five dollars and unused for two years.
"We just want to make sure that when you purchase that gift card, you're not making a donation to your local retailer," says St. Sen. Ellen Corbet.
State Senator Ellen Corbett got fed up watching all that money go to waste. So she authored a new law that says beginning January 1, California retailers must give you cash back if you have less than $10 left on your gift cards. A couple dollars here and a few there, and it can really add up.
This is the latest state law to protect gift card buyers and users. Here's some others -- retailers in California may not put expiration dates on their gift cards, they can't legally charge service fees for use of the cards, and they can't deduct value from gift cards just because you haven't used it, unless it's worth less than five dollars and it's been dormant for at least two years.
"Starting January 1, gift cards will be a gift to the person receiving them and not just a gift to the retailer, and that's a good thing," says Holober.
There are many exceptions to the gift card laws. They don't cover bank cards which can have lots of fees attached. Also, they don't apply to promotional gifts or those given away for charitable purposes or for perishable foods.
