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Tips for buying gift cards

Gift Card december2019Gift cards are a popular, convenient gift for the holidays. This holiday season, more than half of Americans plan to buy gift cards, according to the National Retail Federation. They’ll purchase an average of four gift cards worth about $49 each. Spending on gift cards is expected to reach $29.9 billion, up from last year’s $27.6 billion.

Although gift cards seem straightforward, it’s important that both the giver and the recipient read the details for each card to avoid problems, and to find out if additional requirements have been put on by the merchant or bank issuing the card, according to the Federal Deposit Insurance Corporation.


Federal law provides protections for consumers who purchase gift cards, including store and restaurant gift cards, known as merchant cards. These cards can only be redeemed at the stores and restaurants that sell them. Bank gift cards – which carry the logo of a payment card network, for example, Visa or MasterCard – are also subject to federal law protections and can be used wherever the brand is accepted.

Under federal law, a gift card can’t expire until at least five years from the date it was activated. The law also places limitations on fees. For example, the card issuer can’t charge an inactivity fee on a gift card unless there has been no activity for one year and the card clearly states its policy on that fee. In addition, some states have separate laws that provide more protection.

To learn more about gift cards laws, visit the National Conference of State Legislatures’ Gift Cards and Gift Certificates Statutes and Legislation and Federal Trade Commission’s FTC Has Gift Card Tips for Holiday Buying.


Scammers use gift cards as a way to steal money because they’re like cash – any misuse is hard to trace. Unlike credit cards, there usually isn’t any recourse for consumers when a gift card is stolen or used without authorization, so it’s difficult to reverse the purchases or get a refund.

A common scam: Someone poses as an attorney for a family member and claims that the family member is in trouble with the law and needs assistance. They contact you by phone or email, and ask you to purchase gift cards to pay them. After you purchase the cards, the scammers will tell you to provide them with the code numbers and PINs that are often located on the back of cards so that the scammer can redeem them.

No business or government agency will ask you to make payments with gift cards, so if you get this demand, it’s most likely a scam. It’s also wise to never make a payment over the phone or by wiring money unless you can confirm that the request is legitimate.

In addition, be on the lookout for gift card scams if you’re selling merchandise. Someone may contact you to purchase an item and tell you they’ll send a check for more than the purchase price and ask you to give them the difference in the form of a gift card. However, when you try to deposit or cash the check, you’ll find it’s fake.

For more information on identifying and avoiding scams, visit the FTC’s Scammers Demand Gift Cards and Paying Scammers With Gift Cards.

If you think you’ve been the victim of a gift card scam, report it to your local police department. You may also want to notify the FTC, which takes complaints on scams and frauds. You can file a complaint at The FTC Complaint Assistant.

In addition, you should immediately report the scam to the merchant or company that issued the card and ask if they’ll refund your money. Most issuers have phone numbers listed online, so you can call to report a lost or stolen card. You might get back the money left on the card or part of it, and there may be a fee when a refund is provided. You may need to have the receipt and gift card number, so be sure to keep a record of those numbers.


To make sure you and the recipient of your gift card get the most value from your present, the FDIC offers this advice:

  • Avoid buying gift cards from unknown sites. They may be counterfeit or stolen, so be sure to buy gift cards from sources you know and trust.
  • Check the gift card before purchase if you’re buying it from a retailer. Make sure that the codes on the back of the card haven’t been scratched off to show the PIN number.
  • Be sure to read the gift card’s fine print so you’ll know the terms and conditions. Is there an expiration date? Are there fees to use the card? Are there fees if the card isn’t used for a certain period of time?
  • Register your gift card if possible. This could help protect you if the card is lost or stolen.
  • Share this information with the receiver of your gift, so they can be prepared, too.

For more information on gift cards, see the Consumer Financial Protection Bureau’s article Giving or Receiving Gift Cards? Know the Terms and Avoid Surprises.

Prepaid cards are also popular gifts, but the protections are different than those for gift cards.

For more information about prepaid cards, visit the CFPB at New Protections for Prepaid Accounts and see the FDIC’s Consumer News article “Is the Money on My Prepaid Card FDIC-Insured?”


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That's so interesting. I don't think I've ever come across someone wanting a gift card, but if I do, I'll be aware. Thanks.


Hi Rebecca,

Yes, gift cards are extremely popular and many people aren't aware of the terms and conditions. Also, gift cards being lost is a problem.


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