Restaurant gift card laws in five states: what your business must follow

Federal law sets the baseline for gift cards, and states can add to it. A restaurant that sells cards online, to visitors from other states, or across several locations has to follow the strictest rule that applies. This guide covers Massachusetts, Oregon, New York, New Hampshire and Arizona, and explains how to set up a card that works under all of them.

What does federal law require?

The Credit CARD Act and the Consumer Financial Protection Bureau's rule (Regulation E, section 1005.20) say that the funds on a store gift card cannot expire within five years of the date of issue or the date money was last added, that the expiration date must be disclosed, and that inactivity fees are limited. Promotional cards, which are given away rather than bought, and cards for a specific event are treated differently. Our guide to the federal rules covers the details. A state rule applies when it gives the customer more protection than the federal rule.

What does Massachusetts require?

Massachusetts law, chapter 93 section 14S of the General Laws, says a gift certificate sold in the state must stay valid for at least seven years after it is issued. The issue date and the expiration date, if any, must be clearly shown, and if no expiration date is provided the certificate can be redeemed indefinitely. A separate provision of the General Laws penalizes selling a certificate with a shorter redemption window. Check the current rule, including any right to cash back for a small remaining balance, with the attorney general before you rely on a summary.

What does New Hampshire require?

New Hampshire has its own gift certificate rules, including limits on expiration dates and on dormancy or other fees that reduce the redeemable amount. The dollar threshold below which a certificate cannot expire, and the rules for larger balances, should be read from the Department of Justice's consumer guidance. Read the statute and the Department of Justice's consumer guidance before you print terms.

What about New York, Oregon and Arizona?

New York's General Business Law section 396-i says a gift certificate with an expiration date may not expire earlier than the later of nine years after issuance or the date the funds were last loaded, so the old five-year summaries are out of date. Several bills have proposed to prohibit expiry altogether, so check the current status on the State Senate's website. For Oregon, one 2026 summary says expiration dates and fees other than activation are prohibited, but it did not quote the statute. For Arizona, the only result was a note that the state's law does not cover general-purpose reloadable prepaid cards or loyalty cards; it gave no expiry rule. Treat Oregon and Arizona as unconfirmed, and read the current statute or ask the attorney general or a lawyer before you set terms.

How do you design a card that works everywhere?

A practical rule is to follow the strictest of the rules you might face:

1. No expiration date, or at least nine years, which meets the federal five-year rule, the Massachusetts seven-year rule and the New York nine-year rule.
2. No dormancy, inactivity or service fees on cards you sell.
3. Show the issue date and the terms on the card, the receipt and the e-gift message.
4. Keep promotional cards separate, with a clear label, a short use-by date and no cash value, and use different card stock or codes.
5. State your rules for lost cards, such as requiring proof of purchase.

The simplest compliant policy is a card that never expires and carries no fees.

What about unclaimed property?

A balance that goes unused for years may have to be reported and sent to the state as unclaimed property, a process called escheat. Each state sets its own rules, including the dormancy period and whether gift certificates are exempt or partly exempt. National listings of state treasurers show treatment varies, with some states exempting gift certificates and others not. Ask your accountant how this works in your state, because a restaurant that sells cards online may owe property to the customer's state, not only its own.

How do you account for gift cards?

A sold card is a liability until it is redeemed, not income. Record each sale in a liability account, move it to revenue when the card is used, and keep a report of outstanding balances. Sales tax rules on cards vary by state; in several states the tax applies when the card is used for a meal and not when it is sold. See our state tax guides for details.

What happens when a business closes or is sold?

Outstanding cards are a liability to customers. If you sell the business, the sale agreement should say who honors them. If you close, check your obligations with a lawyer, since customers may have claims. Selling cards close to a closure is risky and can draw complaints.

What should you do now?

Read your current card terms against the table above. Remove any fee or expiry that conflicts with the strictest rule. Check unclaimed property rules with your accountant. This guide is general information, not legal advice, and sources disagreed on several points, including New Hampshire's threshold.

More guides for your business:

• How to fill slow weeknights at your restaurant
• How to get more restaurant reviews honestly under the FTC rule
• How to cut restaurant no-shows with deposits, holds and reminders

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