California’s $15 Gift Card Cash-Out Rule Takes Effect April

California Senate Bill 22 raises the state’s gift card cash-out threshold from $10 to $15, effective April 1. Under California Civil Code Section 1749.5(b)(2), retailers must provide cash refunds for gift cards with remaining balances below the statutory threshold upon the holder’s request — and with this change, California will have the highest cash-out threshold in the nation. California already has some of the most stringent gift card requirements, prohibiting expiration dates and service fees on most gift cards. Companies operating in multiple states face a patchwork of similar but varying requirements: approximately 10 states have cash-out laws, with thresholds typically ranging from $1 to $10. States with cash-out laws include Colorado, Maine, Montana, New Jersey, Oregon, and Washington (balances under $5), and Massachusetts (after 90% of the balance is redeemed). 

The October 2025 settlement between Chipotle Mexican Grill and California district attorneys serves as a cautionary tale for businesses preparing to comply with the new $15 threshold. Chipotle agreed to pay $246,000 — including $145,467 in civil penalties, $88,533 in investigative costs, and $12,000 in restitution — to settle allegations that it failed to provide required cash refunds for gift card balances under the then-applicable $10 threshold. The enforcement action involved multiple county district attorneys working collaboratively and resulted in injunctive relief requiring Chipotle to establish a dedicated online portal for cash-out requests and update its gift card disclosures to inform consumers of their redemption rights. With the threshold now increasing to $15, the volume of gift cards eligible for cash redemption will expand significantly, making robust compliance systems even more critical. Common compliance pitfalls that companies face include outdated written policies still referencing old thresholds, inconsistent or inadequate employee training (particularly for front-line staff), point-of-sale systems that lack options for cash refunds, unclear cash-out mechanisms for electronic gift card programs, and terms and conditions that conflict with legal requirements. Even well-intentioned gift card programs can create legal exposure if consumers’ rights to cash redemption are not clearly communicated and easily accessible. Companies should also be aware that regulatory enforcement is not the only risk — plaintiffs’ attorneys have pursued class action claims based on alleged violations of gift card laws in both state and federal courts, meaning noncompliance invites scrutiny from regulators and private litigants alike. Companies should act now to update policies, retrain staff, and modify point-of-sale systems before the April 1 effective date to avoid the type of enforcement action Chipotle faced.