“New Yorkers should not have to worry about whether that gift card in their wallet is still usable,” Secretary of State Robert J. Rodriguez said in a Dec. 19 press release. “The Division of Consumer Protection is reminding consumers that the gift cards they purchase for or receive from loved ones this holiday season won’t decline in value and will be theirs to spend for nine years from the purchase date.”

In 2021, Gov. Kathy Hochul signed legislation to protect consumers from exploitative credit and gift card practices in the state.

The first bill — S.133-B/A.5698-B — created a grace period for the use of reward points after the closing of an account.

“One particular provision in many credit card agreements allows the credit card issuer to cancel all accumulated rewards points or other rewards benefits upon the closure of the credit card account, without affording the credit card holder any opportunity to use accumulated points,” a 2021 press release explained. “This becomes a consumer protection issue when the issuer unilaterally closes an account for reasons such as a holder failing to make a payment, or for unspecified reasons that fall under catch-all clauses such as if the issuer believes the holder may be unwilling or unable to pay their debts on time.”

The second bill — S.3467-B/A.4629-C — prohibited all fees on gift cards, gift cards that decline in value over time and expiration dates on gift cards and gift certificates. It also allowed consumers to receive cash for gift cards and certificates when the remaining value is less than $5. This law, which went into effect last year, states that gift cards and gift certificates purchased on or after Dec. 10, 2022, will remain valid for nine years from the date of purchase.

The law also prohibits any “activation fees, retroactive fees, redemption fees, service fees, dormancy fees, latency fees, administrative fees, handling fees, access fees, periodic fees, renewal fees, re-loading fees, or any other fee of any kind.” There is one exemption: An issuer of a gift card or gift certificate that may be used at multiple businesses may charge a one-time fee for activation costs, not to exceed $9.

The minimum expiration date for gift cards and certificates in New York state has changed over time. Cards and certificates purchased between Dec. 25, 2016, and Dec. 9, 2022, have a five-year minimum expiration date, which is the current federal standard.

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Scam signage law

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In June, the secretary of state reminded businesses of a new law to protect consumers from potential gift card scams.

“With the number of gift card scams on the rise, it’s more important than ever to educate consumers so they know that gift cards should only be used for gifts, not to make payments,” Rodriguez said in a press release. “This new law requiring warning signage where gift cards are displayed or sold will help to reduce the success rate of these scammers and protect consumers’ hard-earned money.”

Effective June 20, 2023, all businesses selling gift cards are required to display a notice at or near where any gift card or gift certificate is displayed or sold, cautioning consumers about gift card fraud.

Citing the Federal Trade Commission, the press release stated that nearly 65,000 consumers filed a complaint related to gift card scams in 2022, with a total loss of $228.3 million.

To help businesses comply with this law, the DCP published model notices that gift card sellers can download and post at their gift card and certificate points-of-sale.

The downloadable signs are available in three different sizes on the DCP website: https://dos.ny.gov/business-resources.

Businesses can also create their own notice, but it must include the following:

– Cautions the purchaser about pre-paid card scams.

– Instructs the purchaser on what to do if they suspect they might be a potential victim of such a scam.

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Different scams

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The DCP says gift card scams can take many forms; however, they are usually phone calls targeting consumers saying that people owe money and payment is required by a gift card. The DCP offers the following examples.

– A consumer received an email that appeared to be from eBay stating that the consumer needed to call to verify his account. The consumer called and was told that in order to complete the verification, he needed to purchase an eBay gift card and provide the code. The consumer recognized it was a scam and ended the call.

– A consumer purchased a puppy from a breeder advertising on Facebook Marketplace. The puppy was $2,000-plus fees, but the breeder stated they didn’t take credit cards, so they instructed the consumer to purchase Visa gift cards and provide the numbers and PINs. The consumer purchased a total of $3,700 in gift cards to pay for the cost of the puppy, shipping, crate and insurance. The breeder then disappeared, and the consumer now realizes they were scammed out of $3,700.

– A consumer received a Facebook message from a friend stating they were stranded with flat tire and they needed money for the tow truck and a new tire. The “friend” asked if the consumer could purchase a $500 gift card for them and they would pay the consumer back. The consumer purchased the gift card and provided the number and pin, but then later found out the friend’s Facebook account had been hacked and the request for the $500 was a scam.

– A senior citizen received an email that appeared to be from his bank to authorize a large cash transfer to an account overseas. The man knew nothing of the transfer, and when he called the phone number in the email, he was told that the only way to stop the transfer was to overdraft his account so there would be no money to transfer out. The man was told to purchase $7,200 in gift cards and the bank would process them immediately to justify the overdraft. He purchased the gift cards and provided the account and pin numbers as instructed. The victim’s wife believed it was a scam and encouraged him to go into a bank branch to verify the information. He then learned it was a scam but, by that point, had already lost $7,200.

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Consumer tips

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The following consumer tips are offered by the state Department of State’s Division of Consumer Protection.

– Research vendors before buying. Verify the legitimacy of the seller. Check reviews and articles.

– Beware of barcodes. The FBI released a warning related to fake barcodes on gift cards. Scammers place fake barcodes over the original barcodes to trick consumers. Consumers are left with an unactivated gift card, while scammers gain access to the funds. To prevent this scam:

1. Check packaging. When buying a gift card, consumers should make sure the packaging and security seals are intact.

2. Check the barcode. Confirm that the barcode is original to the packaging and doesn’t peel off.

3. Pay close attention to information displayed at checkout. Confirm that the information on the receipt and barcode matches the package.

– Use caution with third parties. Consumers should use caution when buying gift cards from third parties or online auctions, as it may be tough to confirm the dollar amount remaining.

– Review the terms and conditions. Before purchasing, consumers should always review the terms and conditions to understand what their recourse is if the gift card is lost or stolen. Companies are required to post terms and conditions either on the card or in attached packaging.

– Beware of scammers. Scammers often seek payment in the form of gift cards, also known as prepaid cards. Government entities, utilities, and other reputable organizations will never call you demanding an overdue bill or debt be paid with a gift card. To learn more, please read our May 2023 alert on gift card scams.

Consumers having difficulty redeeming gift cards are encouraged to file a complaint with the New York State Division of Consumer Protection, which The offers resources and education materials to consumers, as well as voluntary mediation services between consumers and businesses.

The consumer assistance helpline (1-800-697-1220) is available from 8:30 a.m. to 4:30 p.m. weekdays, excluding state holidays. Consumer complaints can be filed at any time at www.dos.ny.gov/consumer-protection.