Legal Report Update: Gift Certificates

As you may recall, the original e-mail (available on regarding gift certificates advised that gift certificates may not contain an expiration date. In response to the then-new law, merchants began charging service fees against the gift certificates, such as fees for non-use, or "dormancy fees". That is, if an owner failed to use a certificate for a certain amount of time, a monthly fee typically a small percentage of the total was deducted from the balance. It may not sound like much, however, over the course of several months, an entire certificate could be consumed by fees.

Once again, your legislators came through for you! Effective January 1, 2004, the law regarding gifts certificates was modified to respond to the merchants' fees. It is still true that a gift certificate may not contain an expiration date and if it does that date is ineffective. In addition, the new law prohibits all service fees, including "dormancy fees".

There is one exception: Dormancy fees may be charged against a gift certificate that has not been used for 24 months, has a balance of $5 or less, and has a visible statement printed directly on it advising of the fee. However, the fee cannot exceed $1.00 per month.