June of last year, Oregon passed SB 756. In short, it requires all gift cards which are sold to be redeemed for cash if the balance is $5 or less and the gift card has been used at least once. The effective date of this legislation is January 1st, 2012.
I'm a fan of seeing cash back laws. The fact is, a consumer should not be required to spend more than the balance of a gift card in order to receive the full benefit and just 3.6% of store-issued gift cards offer a cash back option unless required by law. Because so few retailers offer a cash back policy, you can expect to see more states enact similar legislation in the future.
Not Retroactive, 2011 Christmas Gifts Are Exempt
This change to Oregon Gift Card Law is not retroactive. In other words, all of the gift cards purchased prior to January 01, 2012 are not covered by the new law. So if you received a gift card for christmas this year the merchant is not required to give you cash back. This is only for gift cards sold on January 1st, 2012 and moving forward.
Oregon Got It Right
There are several states with Cash Back Laws. The laws vary slightly, but I think a $5 threshold is reasonable for both consumers and businesses. Thankfully the legislators in Oregon decide to make this rather simple. However, the legislators in Massachusetts did a poor job of crafting a law which is easy for everyone to understand and, in turn, comply.
Massachusetts General Law Part II Title II Chapter 200A, Section 5D reads:
"A purchaser or holder of a gift certificate which, by its terms, prohibits the purchaser or holder from adding value thereto and which has been redeemed for at least 90 per cent of its face value shall make an election to receive the balance in cash or continue using the gift certificate. A purchaser or holder of a gift certificate which, by its terms, authorizes the purchaser or holder to add value thereto and which has been redeemed in part, such that the value remaining is $5.00 or less, shall make an election to receive the balance in cash or continue using the gift certificate."
That's a mouth full and not very easy for consumers or business owners to understand. I'm not sure why the notion of adding value would even be a factor. Furthermore, adding a percentage in the mix just seems to over complicate the situation. In short, a gift card is redeemable for cash if:
1. The gift card is not reloadable, has been used at least once and the balance is less than $5
2. The gift card is not reloadable and at least 90% of the funds have been redeemed.
For more detail, take a look at ScripSmart's full list of cash back laws for gift cards for each state. Cheers to Oregon's legislators for getting this one right.