California Gift Card Law: Civil Code § 1749.5 Cash-Out and Expiration Rules

California gift card law, set out in Civil Code § 1749.5, bans expiration dates and service fees on gift cards sold in the state and requires merchants to pay out any remaining balance in cash when it drops below a set threshold. The protections cover physical cards, electronic gift cards, and traditional paper gift certificates, and any attempt by a retailer to make you waive them is void.¹

Gift Cards Cannot Expire

California flatly prohibits the sale of any gift certificate that carries an expiration date.² A card you bought last month and a card you bought seven years ago are equally valid. There is no sunset period, no “use by” window, and no point at which a retailer can declare the balance forfeited. As long as the store is still operating, it owes you the full face value.

This is stricter than federal law, which allows gift cards to expire after five years. In California, the five-year federal floor does not matter for cards covered by the state statute, because the state ban is absolute.

No Service or Dormancy Fees

The law bars issuers from charging service or dormancy fees that chip away at your balance over time.² A card sitting in a drawer for three years should still hold its original value when you pull it out.

One narrow exception exists. A dormancy fee is permitted only when all five of the following are true at once:²

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

If even one condition is missing, the fee is illegal. Most standard retail gift cards are not reloadable and carry no such disclosure, so in practice this exception almost never applies.

Getting Cash Back for Small Balances

Under § 1749.5(b)(2), any gift certificate with a remaining cash value under $10 must be redeemable in cash.² Recent legislation raises this threshold to $15 effective in 2026 and expands the statutory definition to explicitly include electronic gift cards. The right applies to in-store and online transactions, so retailers with e-commerce operations have to offer a way to request the payout digitally too.

You do not have to make a purchase first. If someone gives you a $9 gift card, you can walk into the store and ask for the cash. The more common scenario is leftover change after a purchase: the register shows a few dollars remaining, and you ask the cashier to pay you the rest in cash rather than leaving it stranded on the card.

“Cash” for this purpose includes currency, a check, or (if both you and the merchant agree) an electronic funds transfer or a credit to a wireless account.² Federal law has no equivalent requirement, so this is a right unique to California cardholders.³

Which Cards Don’t Get These Protections

Not every prepaid product is covered. The biggest category outside the statute is general-use prepaid cards redeemable at multiple unaffiliated merchants, as long as any expiration date is printed on the card. A Visa, Mastercard, Discover, or American Express gift card you buy at a pharmacy falls into this bucket and is governed by federal rules instead.⁴⁵⁶ Read the fee disclosures before buying one.

Section 1749.5(d) also carves out three categories of gift certificates that may carry expiration dates, provided the date appears in capital letters in at least 10-point font on the front of the card:²

Certificates handed out 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, as long as the expiration date is no more than 30 days after the sale date.
Gift certificates issued specifically for perishable food items.

The common thread is that these cards either cost nothing or serve a narrow, time-sensitive purpose. If you paid full price for a standard retail gift card, none of these exemptions touch you.

If the Retailer Goes Bankrupt

California goes further than most states on one important point. Under Civil Code § 1749.6, the money on your gift card is legally trust property. The value belongs to you, the holder, and the retailer is holding your money on your behalf until you spend it.¹

This matters 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. The card’s own terms cannot override this or declare the card void because of a bankruptcy.¹ Outside California, courts have generally treated gift card holders as general unsecured creditors who recover little or nothing in a liquidation. A California retailer in Chapter 11 reorganization cannot unilaterally stop accepting gift cards the way retailers elsewhere sometimes do.

The practical limit is obvious: if a retailer shuts down completely and has no assets left, a trust designation on paper will not conjure money. But for a reorganizing business with ongoing operations, the statute gives California cardholders real leverage.

Lost, Stolen, or Scammed Cards

Neither California law nor federal law offers 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 more like missing cash.⁶ No California statute compels a retailer to replace a lost card.

Your best option is to contact the issuer immediately with the original receipt and card number. Some retailers will freeze the balance and issue a replacement; others charge a fee or refuse. Registering the card online when the option exists, and keeping a photo of both sides along with the receipt, makes replacement easier if something goes wrong.

Gift card fraud is a separate problem. Scammers tamper with cards on store racks, copying the number and PIN before resealing the packaging, and drain the balance as soon as it is activated. Others impersonate a government agency or utility company and demand payment by gift card. If you have already handed over a card number or PIN, the Federal Trade Commission recommends reporting the scam to the gift card company right away, asking for your money back, and filing a report at ReportFraud.ftc.gov.⁷ Some issuers now refund fraud victims, though this is voluntary. When buying cards in a store, check the packaging for signs of tampering around the PIN area and the barcode.

If a Merchant Refuses to Honor Your Rights

When a merchant will not honor a gift card balance or refuses your cash-back request, you have two paths. One is to file a consumer complaint with the California Attorney General’s Office through their online portal, including the merchant’s name, the card details, your receipt, and a written account of what happened.⁸ The office tracks patterns and can act against repeat offenders, but it will not get your individual money back.

Small claims court is the direct route to recovery. For a claim of $1,500 or less, which covers almost every gift card dispute, the filing fee is $30.⁹ Bring the card, your purchase receipt, and evidence of the refusal: a written response from the retailer, the name of the employee who turned you down, or a dated note written right after the encounter. These cases tend to be straightforward because the statute is clear and the merchant’s obligation is not ambiguous. The hardest part is usually just knowing the right exists in the first place.

1
Justia Law. California Code Civil Code Title 1.4a – Gift Certificates
2
California Legislative Information. California Code Civil Code Section 1749.5
3
eCFR. 12 CFR 1005.20 – Requirements for Gift Cards and Gift Certificates
4
California Legislative Information. California Code Civil Code Section 1749.45
5
GovInfo. 15 USC 1693l-1 – General-Use Prepaid Cards, Gift Certificates, and Store Gift Cards
6
Federal Deposit Insurance Corporation. What You Should Know About Gift Cards
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