Suit Says Retailers Sold Expiring Gift Certificates

Some national retailers were accused Friday of violating a 1997 state law that bans the sale of gift certificates or gift cards with expiration dates.

A Santa Ana attorney filed a lawsuit in Orange County Superior Court on behalf of eight people who say they purchased or received certificates with expiration dates.

“After [the expiration date], most people throw away the gift certificates without understanding the certificates are good indefinitely under California law,” attorney Neil B. Fineman said.

Under the law, companies are prohibited from putting expiration dates on certificates unless they are for a food product or are part of a promotional program or charitable function. In those cases, the expiration date must be marked clearly on the front of the gift certificate. The law took effect Jan. 1, 1997.

The suit, which seeks class-action status, named more than 20 businesses, including retail chains such as Target Corp. and J.C. Penney Co.

Fineman said most of the expiration dates are printed in small type and range from three months to two years after the certificate is issued.

The suit seeks an injunction halting the alleged violations. Fineman said he also will ask the court to create a fund to reimburse customers who discarded gift certificates or a gift card that they thought was worthless.

Target and Penney denied the allegations.

“I would presume that we are aware of the law,” Target spokeswoman Carolyn Brookter said. “We don’t have expiration dates.”

Penney is “aware of the law in California and we comply,” said spokeswoman Stephanie Brown. “None of our gift certificates or gift cards have expiration dates on them.”

The suit also said some companies attempt to skirt the law by selling gift cards that may not have an expiration date but contain charges.

“What the holder of the card doesn’t realize, unless they read the small print on the back, is that if the card is not used within a specific period of time, the store will deduct a “nonuse service charge” each month from the card until the card is useless,” Fineman said.

The California Department of Consumer Affairs has not kept statistics on alleged violations because it has received few complaints, said public information officer Tracey Weatherby. “It’s not one of the No. 1 issues we get complaints on or even in the top 10,” she said.

The law was passed after similar allegations were raised in the early 1990s. In 1994, 18 retailers were named in a class-action lawsuit in San Diego Superior Court for failing to honor gift certificates after expiration dates had elapsed.

In an out-of-court settlement, retailers agreed to honor gift certificates that had expired. The state Legislature later passed a bill prohibiting expiration dates on certificates.