Selling Gift Cards in a Small Shop, the Federal Expiration Rules

Gift cards are attractive for a small shop: money arrives up front, and the person who receives the card may be a brand-new customer. But a gift card is a promise to hold value for someone, and federal rules decide how long that promise lasts and what fees you can charge against it. Getting the setup right at the start, especially the printing on the card itself, is much easier than fixing it later.

1. Which cards the rule covers

The federal rule is in Regulation E, section 1005.20 (eCFR text checked October 2026). It covers three kinds of cards, codes, or devices sold to consumers on a prepaid basis, mainly for personal, family, or household use:

• Gift certificates: a set amount that cannot be reloaded, redeemable at one merchant or an affiliated group.
• Store gift cards: a set amount that may or may not be reloadable, redeemable at one merchant or an affiliated group.
• General-use prepaid cards: redeemable at many unaffiliated merchants or ATMs, like network-branded cards.

For most small shops, the store gift card or gift certificate is the relevant category. Digital codes count too: the rule covers a "card, code, or other device."

1.1. What is excluded

The rule lists several exclusions, including cards that are:

• Loyalty, award, or promotional cards (covered below),
• Issued in paper form only,
• Not marketed to the general public,
• Reloadable and not marketed or labeled as a gift card,
• Usable only for telephone services, or
• Redeemable only for admission to a particular event or venue.

The paper exclusion is narrow. The CFPB's official interpretation says it applies only when the sole means of issuing the certificate is paper and the paper itself is what gets redeemed. A code emailed to a customer is not "issued in paper form" just because the customer could print it.

2. Rule 1: expiration of at least five years

You may not sell a covered card with an expiration date unless the funds last at least the later of:

• five years after the gift certificate was issued, or after money was last loaded onto a store gift card, or
• the expiration date printed on the card, if any.

You also need policies that give customers a reasonable chance to buy a card with at least five years left before the card's own expiration date. The CFPB's interpretation treats this as met if your procedures prevent selling a card that expires in less than five years, or if a card is available for sale five years and six months before its printed expiration date.

If you print an expiration date, the card must disclose the expiration date for the funds (or that they do not expire), a toll-free number and any website for getting a replacement, and, unless the card is non-reloadable with an expiration date at least seven years after manufacture, a statement that the card expires but the funds do not, or expire later, and that the customer can ask for a replacement. You also may not charge for that replacement unless the card was lost or stolen.

The simplest path for many shops is to sell cards whose funds never expire, and say so on the card.

3. Rule 2: limits on inactivity fees

A dormancy, inactivity, or service fee is allowed only if all of these are true:

1. There has been no activity on the card for the one-year period ending on the date of the fee.
2. The card states clearly the amount of the fee, how often it can be charged, and that it can be charged for inactivity.
3. No more than one such fee is charged in a calendar month.

The CFPB's interpretation adds that fees cannot be stacked. Its example: if a card is activated on January 1 and never used, a $2.00 monthly fee may not be accumulated into a single $24 charge on January 1 of the next year.

The FTC's summary for consumers says the same thing in plain terms, and adds that fees may be charged to buy the card or to replace a lost or stolen card.

4. Rule 3: disclose before and on the card

Before purchase, you must disclose the inactivity fee terms, expiration terms, and the other fees that can apply, and those fees and expiration terms cannot be changed after purchase. Certain disclosures must appear on the card itself. The rule specifically says that disclosures in a separate terms document, on packaging, or on a sticker attached to the card do not count as on the card. For electronic cards, the disclosures must appear on the electronic card or code you provide.

5. Promotional cards are different

A "$10 off your next order" card handed out free as part of a promotion can be a promotional card, and promotional cards are excluded from the five-year and fee rules. But they must carry their own disclosures:

• On the front: a statement that it is issued for loyalty, award, or promotional purposes, and the expiration date for the funds.
• On or with the card: any fees and when they apply.
• On the card: a toll-free number, and a website if you keep one, for fee information.

Without those disclosures, a promotional card does not meet the definition, and the stricter rules can apply.

6. A simple setup for a small shop

1. Decide whether funds will expire. "No expiration" avoids most of the disclosure work.
2. Decide on fees. If you charge no inactivity or service fees, the fee conditions above never come into play.
3. Print or display required disclosures on the card or code itself, not just in fine print elsewhere.
4. Label promotional cards clearly as promotional, with their expiration date on the front.
5. Track balances and reload dates, since the five-year clock restarts when money is added.
6. Check your state's rules too, since this article covers only the federal requirements.

7. Key takeaways

• Regulation E section 1005.20 covers gift certificates, store gift cards, and general-use prepaid cards, including digital codes.
• Gift card funds cannot expire sooner than five years after issue or the last reload.
• Inactivity fees require a year of no activity, clear on-card disclosure, and no more than one fee per month.
• Required disclosures must be on the card itself; packaging and stickers do not count.
• Free promotional cards are excluded only if they are clearly labeled as promotional with the expiration date on the front.