New Law Requires Businesses to Redeem Gift Cards Under $5 for Cash

A bill introduced by Rep. Scot Z. Matayoshi requires Hawai‘i merchants to refund consumers the remaining balance of their gift cards if the value remaining is less than $5, according to a July 26 press release.

“If you are given a gift card and use most of it leaving just a small balance, the card is often just dropped in a drawer and forgotten,” said Rep. Matayoshi (Kāne‘ohe, Maunawili, Olomana). “In Hawaiʻi, gift cards don’t expire, so the merchant gets to keep that balance. With so many gift cards issued by mainland companies, that money is being held and spent out of state instead of returned to local consumers.”

HB314, now Act 236, requires a certificate issuer to redeem the remaining value of a gift certificate or gift card for cash if it has a balance left of less than $5.

The bill, which takes effect on Jan. 1, 2020, amends state law section §481B-13 of the Hawaiʻi Revised Statutes. The only exemption is for gift certificates that are issued as part of an award, loyalty or promotional program, or to a not-for-profit charity organization where no money or anything of value is given to the issuer by the consumer in exchange for the gift certificate.

“Many people may just throw away gift cards with a negligible balance because they feel like it’s not worth their time to redeem and would need to spend more than the remaining amount to purchase anything,” said Rep. Matayoshi. “This is supported by statistics issued by Consumer Reports, which reported that billions of dollars are left unspent and unredeemed on gift certificates in the United States each year. This bill will allow some of that money to stay in Hawaiʻi’s economy and ensure that consumers receive the full benefit of a gift certificate.”

According to the state Department of Commerce and Consumer Affairs, 12 other states have laws requiring that a merchant issue cash on remaining gift certificate balances.

Any violation of this law shall constitute an unfair or deceptive act or practice in the conduct of trade or commerce within the meaning of section §480-2, so it is important that merchants be made aware of this new law prior to the Jan. 1, 2020, effective date.