Leawood, Kan. – May 30, 2025: The California Senate continues to consider increasing mandatory cash redemption or cash-out requirement after a similar measure failed to pass last year. Senate Bill 22 (“CA SB 22”) aims to (i) significantly increase the mandatory cash redemption amount for certain types of gift certificates and gift cards from $9.99 to $25.00, and (ii) require gift card issuers to display a notice at the cash register that discloses the gift card owner’s right to redeem their gift card for cash. If enacted, CA SB 22 would likely become effective January 1, 2026.
Currently, gift certificate is defined as, “…gift cards, but does not include any gift card usable with multiple sellers of goods or services, provided the expiration date, if any, is printed on the card. This exemption does not apply to a gift card usable only with affiliated sellers of goods or services.” West’s Ann. Cal. Civ. Code § 1749.45(a). Thus, the mandatory cash redemption requirement is considered to apply to closed loop gift card programs or programs where the card is redeemable at affiliated brands. It likely does not apply to cards that are redeemable at multiple unaffiliated merchants, for example, mall or shopping center gift card programs or open-loop gift card programs.
The definition of “cash” would remain the same. The statute provides, “[f]or purposes of this section, “cash” includes, but is not limited to, currency or check. If accepted by both parties, an electronic funds transfer or an application of the balance to a subscriber’s wireless telecommunications account is permissible.” West’s Ann. Cal. Civ. Code § 1749.5(h).
SB 22 has been reported favorably out of the Senate Judiciary Committee. It is waiting for a vote by the full Senate. After approval by the Senate as a whole, it would move to the House of Representatives and likely be assigned to a committee in the House of Representatives.
Card Compliant will continue to monitor this bill. To read California Senate Bill 22 as amended to date click here: California Senate Bill 22.
About the Compliance Libraries:
The Compliance Libraries provide a one stop location for comprehensive information on the laws, rules and standards regulating gift cards. Its range includes federal and state laws, GAAP accounting standards and tax rules along with other helpful items.
For more information visit www.compliancelibraries.com.
CARD Alerts are distributed by Compliance Libraries which is maintained by Card Issuance & Management, Inc., a subsidiary of Card Compliant, LLC.