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US gift card rules for distributors: CARD Act, Regulation E, FinCEN and state laws side by side
Which US gift card rules should a distributor check?
Short answer. Our reading: Check these provisions separately with counsel: federal 15 U.S.C. 1693l-1 / Regulation E, FinCEN prepaid access, California Civil Code 1749.5 and New York GBL 396-i. This comparison is not a conclusion about any company’s status.
Key points
- Our reading: Review product scope before applying a rule; a gaming card, digital code or other gift product needs assessment against the relevant definitions and exclusions.
- Our reading: Federal expiration and fee provisions should not substitute for reviewing the collected California and New York requirements.
- Our reading: FinCEN seller and provider classifications require separate analysis of loading, identification, transaction values and program responsibilities.
- Our reading: Review AML, registration and recordkeeping separately; an exception from registration should not be treated as an exception from every other obligation.
Side-by-side comparison
Each quotation is a short excerpt, not the complete provision. Linked citations identify the official URLs under Sources. Every row was checked on 2026-10-19 at 09:43, Dubai time (UTC+4).
Federal section 15 U.S.C. 1693l-1 was added by Pub. L. 111–24, title IV, §401(2) (May 22, 2009), which “may be cited as” the “Credit CARD Act of 2009” — Pub. L. 111–24, Sec. 1(a); the US Code source note reads: “(Pub. L. 90–321, title IX, §915, as added Pub. L. 111–24, title IV, §401(2), May 22, 2009, 123 Stat. 1751; amended Pub. L. 111–203, title X, §1084(1), July 21, 2010, 124 Stat. 2081.)” — 15 U.S.C. 1693l-1, 2023 edition.
| Topic and check time | Federal: 15 U.S.C. 1693l-1 / Regulation E | FinCEN prepaid access | California: Civil Code 1749.5 | New York: GBL 396-i |
|---|---|---|---|---|
| Expiration — 2026-10-19, 09:43 UTC+4 | “not earlier than 5 years” — §1693l-1(c)(2)(A). Underlying funds: “at least the later of” the specified dates — §1005.20(e)(2). | Not addressed in the collected text | “It is unlawful” … “An expiration date.” — §1749.5(a)(1); exceptions in (e). | “not earlier than the later of nine years after the date on which the gift certificate was issued, or the date on which funds were last loaded” — §396-i(5-a). |
| Dormancy, inactivity and service fees — 2026-10-19, 09:43 UTC+4 | “no activity” in the “12-month period”; “not more than one fee” in a month — §1693l-1(b)(2). “Not more than one dormancy, inactivity, or service fee” per calendar month — §1005.20(d)(3). | Not addressed in the collected text | “A service fee, including, but not limited to, a service fee for dormancy, except as provided in subdivision (f).” — §1749.5(a)(2). | “any other fee of any kind”; open-loop exception: “an initial one-time activation or issuance fee” — §396-i(5)(a). |
| Required disclosures — 2026-10-19, 09:43 UTC+4 | “clear and conspicuous”; “Before” purchase; “on the certificate or card” — §1005.20(c)(1), (3)–(4); fee notice also in §1693l-1(b)(3). | Not addressed in the collected text | Dormancy statement: “at least 10-point font”; “visible to any purchaser prior to the purchase thereof” — §1749.5(f)(5). | “TERMS AND CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT CARDS”; notice that “cautions the purchaser about prepaid card scams” — §396-i(2-a), (2-b). |
| Cash redemption — 2026-10-19, 09:43 UTC+4 | Not addressed in the collected text | Not addressed in the collected text | “less than fifteen dollars ($15) is redeemable in cash for its cash value” — §1749.5(b)(2); exception in (c). | “less than five dollars may be redeemed upon request for its cash value” — §396-i(5-b); excludes open-loop and promotional certificates. |
| Exclusions and scope — 2026-10-19, 09:43 UTC+4 | “Reloadable and not marketed or labeled as a gift card or gift certificate”; “Not marketed to the general public” — §1005.20(b); also §1693l-1(a)(2)(D). | Closed-loop exclusion: “not to exceed $2,000 maximum value”; provider: “principal oversight and control” — §1010.100(ff)(4). Definitions also in (ff)(7), (ww), (kkk). | “This section does not apply” to specified certificates, subject to conditions — §1749.5(e). | “gift certificate”; “open loop gift certificate”; “promotional gift certificate” — §396-i(1)(a); exclusions in (1)(b). |
| AML, registration and recordkeeping — 2026-10-19, 09:43 UTC+4 | Not addressed in the collected text | “an effective anti-money laundering program” — §1022.210(a). “Each provider of prepaid access must identify each prepaid program” — §1022.380(a)(1). “transactional records for a period of five years” — §1022.420. | Not addressed in the collected text | Not addressed in the collected text |
Massachusetts — M.G.L. c.200A §5D: not collected.
What a distributor should check
1. Classify the product and its route to market
Our reading:
- Check: Ask counsel to assess each product’s redemption network, reloadability, marketing and consumer-facing format.
- Scope: Regulation E includes cards and codes, but also exclusions; B2B distribution alone should not be used to resolve the product’s treatment.
- Gaming products: Check the actual redemption terms rather than relying on the category label.
- Compare: §1005.20(a)–(b), §1693l-1(a) and §396-i(1).
2. Separate card expiration from underlying-funds expiration
Our reading:
- Action: Check both dates and the process for replacing an expired card while funds remain available.
- Federal: Regulation E addresses a reasonable opportunity to purchase a card with at least five years remaining, the underlying-funds expiration calculation, replacement disclosures and replacement charges.
- Action: Compare those provisions with California’s prohibition and exceptions, and New York’s nine-year wording and exceptions.
- See: §1005.20(e), §1749.5(a), (e) and §396-i(3-b), (5-a).
3. Review every fee and its conditions
Our reading:
- Action: Check the fee type, trigger, frequency and disclosure—not just its name.
- Fee conditions: Federal inactivity-based fees have inactivity, disclosure and monthly-frequency conditions.
- Dormancy exception: California’s dormancy exception requires all listed criteria: a balance of $5 or less, a fee no greater than $1 monthly, 24 consecutive inactive months, reloadability and the specified statement.
- Open-loop exception: New York’s open-loop exception requires a cost-related initial fee capped at $9.
- See: §1005.20(d), (f), §1749.5(f) and §396-i(5).
4. Inspect the consumer-facing disclosure materials
Our reading:
- Check: Obtain the card or code presentation, accompanying terms and purchase-flow disclosures for counsel’s review.
- Federal: Regulation E distinguishes information required on the card from information allowed on or with it; packaging alone does not satisfy its on-card requirements.
- Disclosures: New York separately addresses notices, permitted placement of terms and scam warnings.
- See: §1005.20(c), (f) and §396-i(2-a), (2-b), (3), (3-a).
5. Confirm cash-redemption handling and exceptions
Our reading:
- Check: Ask how applicable redemption requests reach the responsible party.
- Cash redemption: California’s collected text uses a cash value below $15 and includes a donated-certificate exception with disclaimer conditions.
- Redemption scope: New York uses a remaining value below $5 and excludes open-loop and promotional certificates.
- Related provisions: California also addresses cash redemption or replacement more generally.
- See: §1749.5(b)–(c), (i) and §396-i(5-b).
6. Map the potential FinCEN seller and provider roles
Our reading:
- Check: Identify who receives funds for initial or subsequent loading, whether access can be used before identification verification, and whether sales exceed $10,000 to one person in one day without reasonably adapted prevention policies.
- Document: Separately document program oversight and the designated information conduit.
- Scope: The $2,000 closed-loop program exclusion should not replace analysis of the seller definition, which expressly includes closed-loop access.
- See: §1010.100(ff)(4), (ff)(7), (ww), (kkk).
7. Determine applicable AML, registration and record duties
Our reading:
- Check: Ask counsel to evaluate each obligation independently.
- Registration: Section 1022.380 contains seller and agent registration exceptions.
- AML: Section 1022.210 addresses written AML programs, identification, training, designated responsibility and independent review.
- Records: Identification retention runs for five years after last use for providers and five years from sale for sellers; §1022.420 separately requires providers’ access to transaction records for five years.
- See: §1022.210, §1022.380 and §1022.420.
Limitations
This article is not legal advice. It covers only the specified collected provisions; the state-law list is not exhaustive.
The federal statute text is the govinfo 2023 edition of the US Code. The eCFR text is current as of 2026-10-15. Subsequent changes: not collected. “Not addressed in the collected text” does not establish the absence of requirements elsewhere.
Sources
L1–L8 all checked 2026-10-19, 09:43 Dubai (UTC+4); Regulation E was fetched via the eCFR API.
- L1: 12 CFR 1005.20
- L2: 15 U.S.C. 1693l-1, 2023 edition
- L3: 31 CFR 1010.100, collected excerpts
- L4: 31 CFR 1022.210
- L5: 31 CFR 1022.380
- L6: 31 CFR 1022.420
- L7: California Civil Code 1749.5
- L8: New York General Business Law 396-i
- L9: Pub. L. 111–24, Credit CARD Act of 2009 (govinfo) — retrieved 2026-10-19, 10:12 Dubai (UTC+4)
Date & update log
- Last updated: 19 Oct 2026
- 2026-10-19: Source-check date; comparison based on the supplied official-text collection.
- Publication date and subsequent updates: not collected.
For retailers sourcing gift cards, see WG Cards’ ecommerce and retail page.
Key takeaways
- Our reading: Federal dormancy, inactivity and service fees are subject to a 12-month inactivity condition. — §1693l-1(b)(2)
- Our reading: Check state cash-redemption thresholds separately: California uses a cash value below $15, while New York uses a remaining value below $5. — §1749.5(b)(2) and §396-i(5-b)
- Our reading: A provider records check should confirm access to transaction records for five years. — §1022.420