The current law pertaining to the usage of gift cards can vary depending on the store or restaurant’s policy where the gift card is being redeemed or purchased.  However, this freedom on behalf of the retailer and/or restaurateur in creating their own rules  is dangerously close to being revoked.  With the recent proposal for legislation by Senator Ellen Corbett, she hopes to mandate that restaurants be forced to cash out gift cards with a monetary value of $20.00 or less to all patrons.  

Many are taking steps to insure this law does not go into effect due largely because of the potentially negative implications this could cause restaurants as a whole.  As stated by the California Restaurant Association which vehemently opposes this law, “Under the SB 885 (gift card cash out proposal), a restaurant could issue a gift card, incur the fees associated with the issuance of the card…, and then be forced to pay the full amount upon redemption.”  Restaurants could find themselves at a grave disadvantage given the fact that under the proposed law, the allowances by patrons require no purchase in order to redeem the cash from the gift card.

 In addition to the negative repercussions due to money loss for restaurants, this proposition for legislation also creates another potential threat for both consumers and restaurateurs alike. Because under the proposed law any one person may enter into a restaurant establishment and receive cash on the spot, the chances for heightened security fraud increase. Gift cards not only have a greater chance of being stolen, but also make it more enticing for criminals with a stolen credit card to purchase gift cards either online or at a restaurant and receive cash instantaneously.

The California Restaurant Association along with many restaurateurs, are advocating that those also in opposition with the current proposal for SB 885, contact their local state Senator.  Let them know of your discontentment with the law’s specifications as well as your concern for the overall harmful effects it could pose for the restaurant industry as a whole.

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