New Gift Card Law Provides Consumer Protection, But is No Guarantee Against Loss

The gift card law as highlighted in the below article is a good effort by the state legislature to protect consumers in the state of Michigan. While the intent and content of the law is excellent, it does not protect against a situation where a consumer is holding a gift card for a bankrupt business or a business which is no longer operating. If a business discharges its liabilities in Chapter 7 and ceases to exist, the gift card will be of no value. The best practice for individuals receiving gift cards is to spend them as soon as possible.

- Dan Penning
Gift cards to last for five years thanks to new state law
Published: November 12, 2008
Michiganders will have at least five years to use the next gift card or gift certificate they receive, thanks to a new state law, effective Nov. 1. The three-bill package also prevents retailers from altering the terms or conditions of a gift card or certificate after it has been issued, prohibits inactivity and other fees, and requires retailers to accept gift cards and certificates during a special sale, closeout or liquidation.

Gov. Jennifer Granholm, who signed the legislation in July, says gift cards are a worry-free solution to gift giving that consumers should be able to enjoy freely.

"This is a way of protecting wallets and making sure that consumers are getting the most from their dollars as we head into this busy shopping season," she said in a statement.

The requirement applies only to new gift cards or certificates sold on or after Nov. 1, just in time for the holiday shopping season. It does not apply to gift cards issued by banks or financial institutions.

Birmingham retail consultant Ed Nakfoor expects the popularity of gift cards to increase this year, as notions that the plastic presents are impersonal go out the door.

"Years ago, people might have thought twice about giving a gift card because it didn't really seem like a traditional gift, but I think that stigma has certainly passed.

Even the way a gift card is presented has changed. It used to be a paper certificate, now it's an actual card that is, oftentimes, in an attractive box, so it looks like more of a traditional gift," he said.

A survey for the National Retailer Federation estimates that about 54.9 percent of consumers would like to receive a gift card for the holidays this year, which is up slightly from 53.8 percent last year. It also projected that gift cards would be the most requested gift this year, followed by books, CDs, DVDs, videos and video games, and clothing or accessories.

"The convenience factor can't be beat, and I think that the stores like them because they're getting someone in their store, and oftentimes that person will spend more than the amount on the gift card, so it's definitely a plus for the merchants," Nakfoor said.

Consumers can report violations of the gift card law to the state Consumer Protection Division at (517) 373-1140, or

You can reach Staff Writer Mary Beth Almond at or at (586) 498-1060.

Gift card and gift certificate guidelines and tips

When buying a gift card or certificate, make sure you only make purchases from a reputable source and pay close attention to the following:

Purchase use or restrictions.

Expiration date.

All fees.

Replacement policy for lost or stolen cards.

Inspect the card before you buy it.

Ask for an extra receipt.

Source: Attorney General Mike Cox Consumer Alert