Louisiana gift card law for restaurants: five years and no fees

Gift cards bring in cash before a meal is served, and they bring in guests who might not have found you otherwise. They also create a promise that the law holds you to. Louisiana's rule on gift certificates sits in the deceptive trade practices chapter of the Revised Statutes, and a violation is treated as a deceptive and unfair trade practice. Here is R.S. 51:1423 in plain terms for an owner who sells cards at the counter, online or through a holiday promotion. Read the statute itself and ask a lawyer before you print a card.

Does the Louisiana law cover restaurant gift cards?

Yes, in most cases. The statute defines a gift certificate as a written instrument, identified as a gift certificate or gift card, that a buyer purchases for another person, which can be used in place of cash for goods or services from the seller but cannot be cashed out. The definition reaches electronic cards with a stored dollar balance, merchandise credit and prepaid arrangements where the issuer has collected full payment for future goods or services. A restaurant card sold for a meal fits this description.

How long must a gift card last?

An expiration date earlier than five years from issuance is unlawful. If you choose to put a date on the card, it has to be at least five years after the day you issue it. A card sold with no expiration date remains valid until it is redeemed or replaced. Because a five year date is the least you may give, many owners print no date at all, which also removes the burden of tracking dates.

How must the date be shown?

If the card has an expiration date, the statute requires it to appear in capital letters, in at least 10-point font, on the certificate. That is the only disclosure the statute requires. Check your printed cards and your electronic ones. A date in light gray type on the back of a card, or in the fine print of an email, does not meet a capital letters and 10-point test. If you use a card system, ask the vendor to show you a sample of the exact wording and type size.

What fees may you charge?

Service fees are prohibited. The statute gives a dormancy fee as its example, so you cannot deduct a monthly charge from a card nobody has used. The issuer may charge a one-time handling fee of no more than one dollar per certificate. Many restaurants charge nothing at all, because a fee can feel mean-spirited and can cost a sale. If you do charge the dollar, say so at the point of sale.

Which cards are exempt?

The statute lists exemptions. Certificates given to consumers through award, loyalty or promotional programs, when the consumer gives nothing of value in exchange, are not covered. Neither are certificates sold below face value, or donated to nonprofit or charitable organizations for fundraising. General-use prepaid cards, as defined under the federal CARD Act of 2009 and issued by federally insured depository institutions, are also exempt. A free dessert coupon you hand out is a promotion, while a card a guest buys is a gift certificate, so keep the two clearly separate in your records and on the cards.

How do you handle a restaurant closing or a lost card?

What a restaurant must do about cards when it closes is a question for a lawyer. As a practical matter, an owner who plans to sell the business should make a list of outstanding card balances and decide before the sale who honors them. A card system that records every balance makes the list easy.

How should you track card balances?

Use a system that records the card number, the amount sold, the date and every redemption. Paper cards with handwritten balances are the usual source of disputes, because a guest who remembers a larger balance than your ledger shows has a fair complaint. Reconcile the system's balance report to your books each month, and keep the sales of cards in a liability account until the card is used, since the money is owed to the guest. Your accountant can tell you how to treat card sales for tax purposes, which is a question for them.

What should you do next?

Pull a card from your drawer and read it against the points above. Is there an expiration date, and if so is it five or more years out and in capital letters? Is there any fee? Does the card say it cannot be cashed out? Fix the card design before the holiday rush. Then read how debit card surcharges are treated, since a guest who buys a card at the counter may pay with one.

More guides for your business:

• Louisiana debit card surcharge ban (Act 751) for restaurants
• Louisiana Click-to-Cancel Act for restaurant memberships
• Restaurant gift cards: CARD Act rules

More in the US guides for food businesses.