Gift cards are regulated, and the rules vary by country and, in the US, by state. They cover how long a card stays valid, which fees can be charged, what happens to unspent balances, how terms are disclosed and, for some cards, whether the issuer needs authorization to issue e-money. For a brand running a program in several markets, keeping on top of these differences is a big part of the work.
Why the card type matters
Closed-loop cards, which can only be spent with the issuing brand, carry lighter rules than open-loop cards that run on networks like Visa or Mastercard. Our guide to closed-loop vs open-loop gift cards explains the difference.
What gift card regulations cover
- Expiry dates. Cards must give a reasonable window for redemption; the minimum depends on the market.
- Fees. Dormancy or inactivity fees are restricted, especially on open-loop cards.
- Unclaimed property. In some places, unspent balances must eventually be reported and handed to the state (escheatment).
- Lost or stolen cards. Many rules require the remaining balance to be replaced if the customer has proof of purchase.
- Disclosure. Terms and conditions must be clear, so customers know their rights.
- Fraud and anti-money laundering. Open-loop cards in particular carry extra security requirements.
Gift card rules in the United States
Federal rules
Under the CARD Act, most gift cards can’t expire within five years of the date they were bought or last loaded, and inactivity fees are restricted. Open-loop cards are also covered by the Electronic Fund Transfer Act and Regulation E, which require clear disclosures, limit fees and add other consumer protections.
State rules
Many states add stricter rules. In many states, unclaimed balances must eventually be reported and handed to the state as unclaimed property, which affects how breakage can be treated.
Gift card rules in the United Kingdom
There’s no general legal minimum expiry period for store gift cards, so the brand’s terms set the expiry date. Consumer protection law requires those terms to be clear and fair.
Gift card rules in the European Union
Rules differ by member state, and open-loop cards fall under e-money regulation. In Germany, for example, vouchers are valid for three years by law.
When is a gift card e-money?
The “loop” labels describe where a card is accepted, not its legal status. Under Germany’s Payment Services Supervision Act (ZAG), the test is whether a card is e-money, and the key question is whether parties other than the issuer accept it. An e-money card can’t be issued without authorization unless it falls under the “limited network” or “limited range of goods and services” exclusions, which require use to stay within a specific location or a small group of providers. BaFin sets out the requirements in its guidance on the ZAG.
Gift card compliance for brands
The issuer of a gift card is responsible for holding customer funds and meeting the rules in each market. Running that in-house takes legal expertise and constant updates across expiry, fees, unclaimed property, AML and consumer rights. Many brands hand this to a specialist issuer instead.
With epay’s gift card issuing and compliance services, epay handles the regulatory and legal side, from T&Cs and third-party agreements to escheatment, AML and consumer rights, along with fund handling and settlement. See how gift cards work end to end.
