3 Questions with Matt Saldaña: Shopping, Spending, and Shipping Delays


3 Questions with Matt Saldaña: Shopping, Spending, and Shipping Delays

Matthew J. Saldaña

Most of us love to give and get gift cards and gift certificates. What does the law say about expiration dates for them?

Gift cards and gift certificates (including certain general-use prepaid cards) are regulated under both state and federal law. The federal CARD Act requires gift card issuers to provide certain disclosures for fees and expiration dates, and sets a five-year minimum for the card’s expiration. ME’s gift card law is even stricter than the CARD Act because it generally does not allow for any fees (other than for the initial transaction and/or adding additional money to the gift card) and also does not allow for any expiration date. Similarly, New Hampshire law prohibits expiration dates for gift certificates that are worth less than $250. Gift cards also delve into the complicated web of state laws that relate to unclaimed property or escheat law. Specifically, many states require that, after a certain period of dormancy, the funds must be remitted to the state’s unclaimed property fund (where consumers can search for any unclaimed property owed to them). There is significant exposure if companies get this wrong, so companies should consider establishing unclaimed property policies and procedures.

When it comes to returns and exchanges, do businesses have any protections?

Certain state laws govern disclosure requirements for refund and return policies. However, in general, a company is not required to accept returns unless the product is defective, in which case it may be covered by an implied warranty that the product is fit for its intended purpose. However, many companies will have broader return policies to increase goodwill and brand loyalty. Whatever your return policy is, it is important that the policy is prominently displayed to consumers at the place of purchase.

We’ve all heard about supply chain issues this year. Are businesses required to let online shoppers know about shipping delays?

Yes, the FTC’s Mail Order Rule requires all companies to have a reasonable basis for stating or implying that they can ship within a certain time. If no shipping statement is made, you must have a reasonable basis to believe you can ship any product within 30 days. The rule also mandates that companies notify consumers of shipping delays in a timely manner and give them the option to cancel orders and receive prompt refunds. Under the rule, “shipment” is defined as the act by which the merchandise is physically placed in the possession of the carrier, after which the carrier – not the business – is responsible. However, given widespread supply chain issues, more and more companies are experiencing inventory problems that may cause them to run afoul of the Mail Order Rule. Both the FTC and state regulators have brought enforcement actions in recent years—a trend which may continue in 2022 and beyond.

Published: Jan. 25, 2022