Wednesday, November 19, 2008

Food Gift Certificates Exempted from California Expiration Ban

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Because the California gift certificate statute provided that certificates “issued for a food product” may contain an expiration date, a frozen food home delivery service (Schwan's) could not have engaged in deceptive practices by selling certificates that expired one year after issuance, a California appellate court has ruled.

A purchaser alleged that the inclusion of the expiration date in the certificates violated the California Consumer Legal Remedies Act (CCH Advertising Law Guide ¶30,514) and Unfair Competition Law (CCH Advertising Law Guide ¶30,510). However, the gift certificate law's exemption of “food product” gift certificates from its prohibition against expiration dates (CCH Advertising Law Guide ¶30,515) encompassed frozen foods.

Telephone Sales of Gift Certificates

The purchaser was not allowed to amend the complaint to allege that, even if the certificates complied with the gift certificate statute, it would still be an unfair practice to sell them over the telephone without first disclosing the limitations placed on them, including a restriction disallowing cash refunds.

The purchaser provided no authority to support the contention that the failure to disclose a valid expiration date or redemption limitation over the telephone was an unfair business practice, according to the court. The gift certificate statute on its face did not prohibit sales over the telephone, and it did not require that issuers disclose expiration dates or redemption restrictions when making telephone sales.

The statute simply required issuers of gift certificates with valid expiration dates to print those expiration dates “in capital letters in at least 10-point font on the front of the gift certificate.” The purchaser did not dispute that Schwan’s had complied with this requirement, the court said.

The October 14 decision in Kennedy v. Schwan’s Home Service, Inc. will be reported at CCH Advertising Law Guide ¶63,155.

More About Gift Certificate and Advertising Laws

Subscribers to the Advertising Law Guide on CCH Internet Research NetWork have access to more detailed coverage gift certificate and gift card laws in New York and more than 35 other states. A newly added Smart Chart™ gives users quick access to the types of certificates and cards that are subject to—and exempt from—the laws. Coverage of fee restrictions, expiration date restrictions, and disclosure requirements is provided, along with links to the law texts.

Information on 500 advertising-related state laws in ten categories with links to the texts is available in the Advertising Law Guide State Laws Quick Reference Smart Charts.™

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