Gift card balances equal cash

Californians soon will be able to convert leftover gift card balances into extra pocket change.

Starting Jan. 1, a state law will let residents redeem gift cards for cash if the balance is less than $10.

Sen. Ellen Corbett, D-San Leandro, wrote the bill after becoming frus- trated with plastic gift cards piling up in a drawer. She said most often there'd be just a few dollars left on the balance.

"The idea came from my own personal ex- perience and my own constituents,' " Corbett said. "They would go to the store with a gift card and try to spend it and have a little bit of money left over, and they weren't able to receive the cash."

Gov. Schwarzenegger signed Senate Bill 250 in October allowing consumers to get cash back on gift cards or gift certificates at most stores. The law doesn't apply to credit card gift cards or ones tied to multiple stores, such as mall gift cards.

The law puts California ahead of three other states that have similar cash redemption laws. Vermont allows cash back for up to $1, while Washington and Montana give money back up to $5.

Heather Chastain of Sacra-mento carries her share of unspent gift cards in her wallet. As much as she loves receiving them, the 35-year-old mother of two welcomes the ability to cash out.

"It's my favorite gift to get, but I stick it in my wallet and frequently forget about them," Chastain said while strolling past the gift card cart at Best Buy in Natomas, in north Sacramento, with her 3-year-old son, Jake, and 7-month-old daughter, Annabel.

"I'm pleased they'll be doing that," she said.

Opponents, however, are worried about fraud.

Milt Moritz, the executive director of the National Association of Theater Owners of California and Nevada, said the law could make it easier for credit card thieves to buy gift cards and turn them into cash.

"We're not a bank," Moritz said. "If someone buys a gift certificate and we have to start refunding, it's an administrative nightmare." Moritz said gift card holders should be able to make full use of their cards because theaters don't just sell tickets; they sell popcorn, hot dogs and drinks that cost less than $10.

The law defines a cash refund as currency or check. Wireless telecommunications companies may electronically credit a person's account.

Even old cards will work

The law will apply to any gift certificate or gift card sold after Jan. 1, 1997. Another state law prohibits retailers from putting an expiration date on gift cards.

The cards have been growing in popularity, and Corbett said as much as $8.2 billion was left unspent on gift cards in the United States in 2006.

According to a holiday shopping poll by Consumer Reports, gift cards are the second most popular item consumers are planning to buy this season. Clothing was No. 1.

Employees at R5 Records and Video at 16th Street and Broadway have been selling the Sacramento store's gift cards for just a few months. Two of them questioned the need for the law.

"If people wanted to give cash as a gift, they would have given cash," said R5 employee Chris-tina Mestas.

"I think with anything, people will find a scam," said co-worker Anna O'Brien.

Both women said they weren't aware of the law.

"I'm wondering how are they planning to let retailers know about this," Mestas said. "Nobody told me."

Initially Corbett, who wrote the bill, wanted cash refunds for balances less than $20, but that proposal was met by heavy opposition from retailers, grocers, businesses and restaurants.

She said she believed $20 was reasonable but decided not to fight an amendment by the Senate Business, Professions and Economic Development Committee lowering the redemption value.

Corbett said the California Retailers Association dropped its opposition as a result of the amendment, helping smooth the way for the bill's passage. Bill Dombrowski, president of the retailers lobby, said the group "saw no way to stop it."

"It's a great victory for consumers and gift givers who will know that the recipients of their gift will be able to get the full value of their gift," Corbett said.

Corbett urged gift card receivers to hold on to their cards.

"Don't lose them," she said. "Cash them in."