California Increases Gift Card Cash-Out Threshold to $15 Starting April 1, 2026

Since January 1, 2008, California law has required retailers to redeem remaining gift card balances of less than $10 for cash when a consumer requests it. This threshold is about to change.

Effective April 1, 2026, gift cards with a remaining balance of less than $15 must be redeemable for cash in California. This change, enacted through California Senate Bill 22, marks the first adjustment to the cash-out requirement since the current $10 threshold was established.

Companies that sell goods or services in California should be aware of this change. Gift cards are widely used across various industries and channels. According to Bankrate, Americans currently hold up to $27 billion in unused gift card balances. Therefore, even this seemingly small adjustment in the law can lead to significant compliance, litigation, and financial implications if businesses do not update their policies and systems in advance.

A Small Dollar Change With Significant Business Impact

A $5 increase in the cash-out threshold may seem minor. However, for companies with large customer bases or high gift card volumes, the overall impact can be substantial. Small remaining balances often encourage customers to return and spend more than the card’s value. If consumers redeem these balances for cash instead, this dynamic changes.

Moreover, for large companies, even a refund of $1 or $2 across millions of transactions can have significant financial implications.  Noncompliance with gift card laws also exposes companies to significant legal risks.

A Brief Look at the Statute

The cash-out requirement appears in California Civil Code section 1749.5, which governs gift certificates and gift cards sold for use in California. As amended by SB 22 and operative on April 1, 2026, some of the important provisions of the statute include:

• Gift certificates generally may not include expiration dates or service fees, subject to limited statutory exceptions.
  
  
• Gift certificates with a remaining value of less than $15 must be redeemable for cash upon the holder’s request, an increase from the prior $10 threshold.
  
  
• The law applies broadly to both physical and electronic gift cards.
  
  
• “Cash” is defined expansively and may include currency, checks, or electronic funds transfers, if accepted by both parties.

The statute also contains several narrow exceptions, including for certain promotional or loyalty gift certificates, donated or discounted certificates issued for fundraising purposes, perishable food certificates, and limited circumstances in which dormancy fees may be assessed. Whether a particular program qualifies for an exception often turns on specific facts, including how the card is issued, whether consideration is paid, and how required disclosures are presented.

Enforcement Efforts and Private Causes of Action

California district attorneys have been actively enforcing the gift card redemption law for several years, often collaborating across counties during these enforcement actions. A recent example highlights this coordinated effort.

In October 2025, Chipotle Mexican Grill agreed to pay $246,000 in civil penalties, restitution, and costs to settle allegations that it failed to provide required cash refunds for gift card balances under the statutory threshold. This enforcement action involved multiple county district attorneys and resulted in an injunction that mandated operational changes, including the establishment of a dedicated online portal for cash-out requests and updated disclosures regarding gift cards.

It’s also important to note that regulatory enforcement is not the only source of risk. Plaintiffs’ attorneys have also pursued class action claims premised on alleged violations of California’s gift card laws in state and federal courts in California.

Companies should assume that noncompliance with the gift card redemption law will invite scrutiny from both regulators and private litigants—particularly following a statutory change that increases potential exposure.

Common Compliance Pitfalls for Companies

Here are some common areas where companies may encounter compliance problems:

1. Outdated Policies: Written policies that still reference a $10 cash-out threshold.
   
   
2. Lack of Employee Training: Training for employees, especially front-line staff handling gift card transactions, may be lacking or inconsistent.
   
   
3. Point-of-Sale System Limitations: Some point-of-sale systems may not provide options for cash refunds.
4. Unclear Cash-Out Mechanisms: Electronic gift card programs may lack a clear process for cash redemptions.
   
   
5. Conflicting Terms and Conditions: Terms and conditions—whether listed online or printed on cards—may conflict with legal requirements.
   
   

Enforcement actions show that even well-intentioned programs can create risks if consumers' rights to cash redemption are not clearly communicated and easily accessible.

Looking Ahead

The statutory change is straightforward, but implementation can be challenging, especially for companies operating across multiple platforms or jurisdictions.

Because statutory exceptions and compliance mechanisms depend on specific program details, companies should review their gift card practices now to minimize risks when the new threshold takes effect.