What is a gift certificate?

Vermont’s definition of a gift certificate is very broad, and includes both traditional paper gift certificates and the increasingly common plastic gift cards similar to credit cards.  The Vermont definition of a gift certificate is “a record evidencing a promise made for consideration by the seller or issuer of the record that money, goods, or services will be provided to the holder of the record for the value shown in the record.”

For example, a gift certificate includes:

• An electronic gift card
• A stored-value card
• A card issued by a retailer or group of retailers
• A paper gift certificate
• Any similar record or card

How long before a gift certificate can expire?

A gift certificate cannot expire until 5 years after the date of issuance or after the date the funds were last loaded onto the gift certificate, whichever is later. Also, upon expiration, the issuer, if requested, must return the unused portion of the paid value of the gift certificate to the holder.  See below for more on expiration dates. 

What if no expiration date is disclosed?

A gift certificate not clearly marked with an expiration date or for which the expiration date is not otherwise made available shall be deemed to have no expiration date.

How must the expiration date be disclosed?

In most instances, both the date of issuance and the expiration date must be clearly identified on the face of the gift certificate.

For an electronic card with a stored dollar value, the expiration date must either (1) be clearly printed upon a sales receipt transferred to the purchaser at the time the transaction is completed, or (2) made available to the purchaser or holder of the electronic card through means of an internet site or a toll free information telephone line.

Must a merchant return the unused portion of a gift certificate upon expiration?

Following the expiration date of the gift certificate, the unused portion of the paid value of the gift certificate shall be returned to the holder of the gift certificate, if requested.

Can a gift certificate be redeemed for cash?

If the remaining value of a gift certificate is less than $1.00 or the certificate has expired, the gift certificate shall be redeemable in cash for its remaining value if the holder requests it.

What fees may be charged?

Vermont law prohibits dormancy fees, latency fees, issuance fees, redemption fees, or any other administrative fees or service charges in connection with a gift certificate. 

However, a money transmitter licensed by the Department of Federal Regulation, a financial institution, or a credit union may charge a one-time fee upon the issuance of a stored-value card equal to the lesser of (a) 10 percent of the face amount purchased or added to the stored-value card; or (b) $10.00.

What is a loyalty, award, or promotional gift certificate?

The definition of a loyalty, award or promotional gift certificate is “a gift certificate that is issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in connection with a loyalty, award, or promotional program and that is redeemable upon presentation to one or more merchants for goods or services or that is usable at automated teller machines.”

The following are examples of loyalty, award or promotional gift certificates:
Loyalty:  A customer who has spent over $500 in a given time period receives card for $50 to be used at any time.
Award: Employer gives gift card for $50 to be redeemed with a local merchant to employees with exceptional job performance.
Promotional:  New bakery charges $30 for gift cards worth $50.  (The paid value of the card is $30; the promotional value is $20.)
Loyalty and promotional:  A customer who has spent over $500 in a given time period receives a card for $50 to be used by January 1.

What are the rules for a loyalty, award or promotional gift certificate?

A loyalty, award, or promotional gift certificate shall clearly and legibly set forth the following disclosures, as applicable:

On the front of the gift certificate:

• Indication that the gift certificate is issued for loyalty, award, or promotional purposes; and
• The expiration date of the gift certificate, including the expiration dates for the paid value of the gift certificate, if any, and the promotional value of the gift certificate, if any.

On or with the gift certificate:

• The amount of any fees allowed by law that may be imposed in connection with the gift certificate and the conditions under which they may be imposed.  See Question 7 for fees that may be charged.

On the gift certificate (front or back):

• If any fee is assessed against the gift certificate, a toll-free telephone number and, if one is maintained, a website address that a consumer may use to obtain fee information.

Is a merchant required to respond to a balance inquiry?

Yes, the issuer of the gift certificate, at the holder’s request, shall inform the holder of the unused balance remaining on the gift certificate as well as the expiration date of the gift certificate.

What are the penalties for violating the Vermont gift certificate law?

A penalty of not more than $1,000.00 per violation may be imposed upon any person who violates any provision of  8 V.S.A. §§ 2701-2711, any applicable rule, or any order issued by the Commissioner of the Department of Financial Regulation, plus the state’s costs and expenses for the investigation and prosecution of the matter, including attorney’s fees.

The Commissioner may order any person to make restitution to any person as a result of a violation of this law.

Any gift certificate that contains any provision in violation of this chapter is contrary to public policy, and is void and unenforceable against the holder of the gift certificate.

May a consumer bring a private right of action under the Vermont gift certificate law?

Yes.

Are there exemptions to these rules?

Yes, the rules outlined above do not apply to any of the following:

• A loyalty, award, or promotional gift certificate issued pursuant to an awards or loyalty program where no money or other thing of value is given in exchange for the gift certificate, provided that the certificate complies with the requirements outlined at Question 9 above. For example, gift certificates given out by a store to persons walking through the store (but not necessarily buying anything) need not have a five year expiration date.
• The promotional value of a gift certificate issued in exchange for paid value, provided that the gift certificate complies with the requirements outlined at Questions 2, 3, 7 and 9 above.
• A gift certificate donated to a charitable organization and used for fundraising activities of a charitable organization, without any money or other thing of value being given in exchange for the gift certificate by the charitable organization, provided that the expiration date is clearly and legibly printed on the gift certificate.
• Prepaid calling cards issued solely to provide an access number and authorization code for prepaid calling services.
• A season pass, a discount ski card, or a gift certificate sold for admission to any seasonal recreational activity.
• A payroll card account issued pursuant to and in full compliance with 21 V.S.A. § 342(c).
• A card for services that is not tied to a specific cash value, i.e., a yoga or fitness punch card that can “only be redeemed for yoga services and not for some monetary value.” 
  See Hughes v. CorePower Yoga, LLC, Case No. 12-cv-00905 (D. Minn. 2013)
  Finding that a class pack of 10 yoga classes was not a “gift card” because the class pack was “unaffected by changes in price” and it “allow[s] the customer to participate in the yoga course regardless of the value of the class at the time the customer redeems his Class Pack.”  The court also noted that gift cards would not include monthly passes to a parking garage, admission passes to theme parks, physical training packages, music lessons, and bus passes good for a certain number of rides.

Disclaimer

Who has to follow this law?
The law applies only to for-profit entities that are “regularly and primarily engaged in trade or commerce” – these are called “commercial co-venturers.” The law does not apply to:

• Nonprofits or religious or fraternal organizations
• Professional charitable fundraisers
• Individuals who normally work in one industry but, on a limited basis unrelated to their normal activities, are undertaking a charitable sales promotion. 

Example: Rebecca is an energy consultant, but every fall she sells pies at the local famers’ market.  This year, she is raising money for building schools in Haiti.  She can say a portion of her profit from the pies will go to building schools, but she does not have to follow all of the disclosure and record-keeping requirements because this is not her regular and primary job.

Are there any promotions where I don’t need to give full disclosure or keep records?
A commercial co-venturer does not have to provide full disclosure and keep records if:

• One-hundred percent of the amount a consumer pays for the good or service goes to the charity.
• The co-venturer does not generate a net profit from the promotion.
  Allen’s Market is raising money for veterans.  It buys and prints t-shirts for Memorial Day.  After recouping the cost of the shirts and printing, Allen’s donates the remaining money to a veterans’ cause.
• The co-venturer does not advertise that any amount of the purchase price of a good or service will go to a charitable cause.  
  Newport Sporting Goods always donates to the annual Lake Swim, but does not advertise that the purchase of any particular product or service will increase or affect the amount of the donation.
• The promotion does not involve the sale or lease of goods or services.  
  “Mt. Ascutney Autobody supports Clean-up the Connecticut.”

If a promotion requires the disclosures, when do I need to provide them?
Anytime – and every time – a co-venturer makes a representation that it will donate to a charitable cause based on the sale of goods or services, it must follow the disclosure requirements of the law.  A “representation” includes any “advertisement, commercial or other communication to the public in any medium.”

Where do I need to put the required disclosures?
The disclosures need to be placed “in close proximity” to any promotional materials suggesting a charitable sales promotion.  This means, for example, on the same sign as the promotion itself, attached to the sales display-rack, included nearby on the same webpage, or listed in the same print or on-air advertisement.

What does the disclosure need to look like?
There is no requirement for the format of the disclosure, but the information must be “clear and conspicuous,” meaning a similarly sized type-face as the promotion, or a separate sign attached to the promotion.  In short, the disclosure must be presented in such a way that it will be readily noticed and understood by consumers.

What qualifies as a charitable organization or charitable purpose?
These terms are defined under Vermont’s charitable solicitations law, 9 V.S.A. § 2471.  A “charitable purpose” means “any benevolent, educational, philanthropic, humane, patriotic, social welfare, advocacy, public health, environmental conservation or civic objective or any objective of law enforcement officers, firefighters or other persons who protect the public safety.”  A “charitable organization” works to further any charitable purpose.

Disclaimer