Gift cards: the 5-year expiry rule, fee limits, and how to dodge draining scams

What's happened

Gift cards are one of the easiest holiday presents, and one of scammers' favorite targets. Ahead of last season, Washington, D.C.'s attorney general warned on December 15, 2025 about "sophisticated gift card 'draining' scams" in which thieves copy codes from cards on the rack, or swap barcodes, and then spend the money as soon as a shopper loads it. Fourteen attorneys general ran a public service campaign about gift card fraud from December 26, 2025 to January 31, 2026, funded by the retail industry's Gift Card Fraud Prevention Alliance.

In January 2026, the FTC also warned about scammers posing as bosses who ask staff to buy gift cards for an "urgent favor," sometimes calling them "Google certificates." Here's what the law protects, and what it doesn't.

What the rules say

The Credit CARD Act of 2009 set national gift card rules, now in the CFPB's Regulation E (12 CFR 1005.20). They cover store gift cards and general-use prepaid cards such as Visa or Mastercard gift cards, including e-codes, when bought for personal use.

• Five years minimum. The money on a card can't expire until at least five years after the card was issued or last loaded. If the plastic expires first, you can ask for a replacement card.
• Fees only after a year. Dormancy, inactivity or service fees can only be charged after 12 months with no activity, no more than one fee a month, and only if the fee is disclosed on the card.
• Terms upfront. Fee and expiration terms must be shown before you buy and can't change afterward.
• Promotional cards are different. Loyalty, award or promotional cards, such as "a free $25 card when you spend $100," don't get the five-year rule. They must say they're promotional and show the expiration date on the front.
• Other exclusions include paper-only gift certificates, reloadable cards not marketed as gift cards, and cards that only pay for entry to a specific event or venue.

Some states go further, for example by banning fees or requiring cash back for small balances. Your state attorney general's website will have details.

A worked example

This is an illustration, not a real case.

Jordan receives a $100 prepaid gift card on December 25, 2026, and forgets about it. The card says a $2.50 monthly fee applies after 12 months of no use. Under federal rules, no fee can be charged before late December 2027. If Jordan finds it in June 2028, up to seven monthly fees ($17.50) could have been taken, leaving $82.50, and that money can't expire before December 2031.

Now say Jordan got a $25 "bonus" card from a store promotion instead. That can expire much sooner, so the date on the front is the one that counts.

How to avoid draining

1. Inspect the packaging. Look for scratched-off PIN covers, damaged barcodes or stickers that have been added or removed.
2. Buy from secure displays. Choose cards kept behind the counter or in locked racks, or buy direct from the brand's own website.
3. Keep the receipt and card number. Register the card with the retailer if you can, and take a photo of the card and receipt.
4. Check the balance on the official site, or in store, soon after buying and before you give it.
5. Never pay a bill with a gift card. Government agencies and real businesses won't ask you to. Anyone asking for the numbers or PIN is a scammer.

FAQs

Is a store gift card safer than a Visa or Mastercard gift card?

Both get the same federal expiry and fee rules, and draining can hit either. Read the fee terms on the package before you buy, as they must be printed there.

Can I pay for gift cards with a credit card?

Often, yes, and the D.C. attorney general recommends it where possible, as credit cards carry stronger dispute rights for the purchase itself.

What happens if the store goes out of business?

Federal gift card rules don't guarantee the money. Use cards from struggling retailers quickly.

Sources: CFPB: Regulation E, 12 CFR 1005.20 gift cards, D.C. Attorney General: gift card scams alert, Washington Attorney General: gift card fraud campaign, FTC: that's not your boss asking you to buy gift cards, FTC: avoiding and reporting gift card scams