Entered by a California court earlier this month, the settlement resolves allegations regarding recently added provisions in California’s gift card statutes. Specifically, the amendments, enacted by California’s legislators in January 2008, require all businesses to, upon customer request, redeem gift cards and certificates for cash if the remaining balance on the card or certificate is under $10.00.
Among other things, the terms of the settlement require the coffee retailer to pay $225,000 for civil penalties, investigative costs, and restitution. Additionally, to prevent future violations of the statute, the settlement also requires that the coffee retailer include a button on its point of sale devices to allow employees to redeem gift cards in the store, implement employee training programs about redemption of gift cards, post detailed procedures to inform employees how to redeem gift cards, and post signs in its California stores to inform customers of their right to redeem gift cards for cash if the balance is less than $10.00. (Retailers generally are not required by law to post such a disclosure, but this was agreed to as part of the settlement.)
The settlement is noteworthy because it not only shows the state’s willingness to prosecute alleged violations of this little known law, but media attention about the settlement may make consumers more aware of the law and bring the statute to the attention of private plaintiffs’ attorneys. Accordingly, when doing business in California, a state already running rampant with frivolous lawsuits, any company issuing gift cards should be aware of this special statutory requirement. Other provisions in California’s gift card statute prohibit the sale of gift cards with expiration dates or service fees.
UPDATE: For a more comprehensive write-up of this settlement, click here.
