Leawood, Kan. – June 7, 2024: Two weeks ago, the California Senate passed Senate Bill 1272 (“SB 1272”). The bill, if enacted in its current form, would significantly increase mandatory cash redemption amount for certain types of gift certificates and gift cards from $9.99 to $25.00, and be “adjusted for inflation on January 1, 2026, and annually thereafter, based on the California Consumer Price Index and rounded to the nearest whole dollar amount.” 2024 CA SB 1272 §1(b)(2). SB 1272 would be effective January 1, 2025.
The increase of the cash redemption amount is the only proposed change to the law. Currently, gift certificate is defined as, “(a) As used in this title, “gift certificate” includes 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.
Additionally, 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).
The bill moved to the California House for consideration and will be considered first by the Privacy and Consumer Protection Committee. The California Legislature is scheduled to adjourn on August 31, 2024. Card Compliant will continue to monitor the bill as it moves through the legislative process.
To read California Senate Bill 1272 click here: California SB 1272.
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