Gift cards are everywhere. They are given as birthday presents, holiday gifts, employee rewards, and store credits. They also create an extremely common annoyance: after using most of a gift card, a consumer may be left with $1.17, $2.03, or some other small balance that seems practically useless.

In Texas, however, the law provides a surprisingly specific rule for certain gift cards.

Under Texas Business & Commerce Code § 604.152, when a qualifying stored-value card is used in person to make a purchase and the remaining balance is less than $2.50, the consumer can request that the remaining balance be refunded in cash.

The statute provides:

“If a stored value card is redeemed in person to make a purchase and a balance of less than $2.50 remains following the redemption, at the consumer's request the seller shall refund the balance of the card in cash to the consumer.”

Tex. Bus. & Com. Code § 604.152.

That is a remarkably specific consumer right hidden in a part of Texas law that most people probably never encounter.

But, as is often the case with statutes, the details matter.

What Counts as a “Stored Value Card” in Texas?

Chapter 604 uses the term “stored value card” rather than simply “gift card.”

Texas Business & Commerce Code § 604.001 generally defines a stored value card as a record representing a promise, made in exchange for money, that goods or services will be provided up to the stored value. The card is prefunded, and its value decreases when it is redeemed.

Importantly, the statute expressly states that the term includes a gift card or gift certificate.

So the law is not limited to the familiar plastic gift card sitting next to a cash register. Depending on how the particular product operates, the statute can encompass other forms of stored value as well.

The Texas $2.50 Gift Card Rule

The cash-redemption provision is straightforward but contains several requirements.

First, the card must be covered by the applicable portion of Chapter 604.

Second, the consumer must actually redeem the card in person to make a purchase.

Third, the balance remaining after that transaction must be less than $2.50.

Finally—and importantly—the consumer must request the cash refund.

The statute does not require the merchant automatically to hand the customer cash whenever a gift-card balance drops below $2.50. It says that the seller must provide the refund “at the consumer's request.”

For example, suppose someone has $7 remaining on a qualifying gift card and purchases an item for $5.25.

The card now contains $1.75.

Because the remaining balance is below $2.50, the consumer may ask the seller to refund that $1.75 in cash, assuming the card and transaction otherwise fall within the statute.

That may not be much money individually. Across thousands or millions of gift cards, however, those tiny unused balances can add up.

Does the Rule Apply to Every Gift Card?

No.

This is where Chapter 604 becomes more complicated.

Section 604.151 excludes several categories of cards from the low-value cash-redemption requirement. Among other things, the rule does not apply to certain cards described in § 604.002(1)-(3), cards issued as refunds for merchandise returned without a receipt, or certain cards with an initial value of $5 or less that cannot be reloaded.

The broader Chapter 604 also contains exclusions for various kinds of stored-value products, including certain cards issued by financial institutions, prepaid calling cards, and cards distributed through qualifying rewards, loyalty, incentive, rebate, or promotional programs.

That means the phrase “gift card” alone does not necessarily answer the legal question.

The particular type of card, who issued it, how it was obtained, and how it is being redeemed can matter.

Can Texas Gift Cards Have Fees?

Chapter 604 also regulates certain fees.

Texas Business & Commerce Code § 604.052 provides that an issuer may impose a periodic fee or charge that decreases the card's unused balance only if three requirements are satisfied: the fee must be reasonable, it cannot be assessed until after the first anniversary of the card's sale or issuance, and it must be disclosed as required by the statute.

Chapter 604 also permits certain reasonable handling, access, reissue, or replacement charges when the statutory disclosure requirements are satisfied.

This is another reason consumers should distinguish between the face value of a gift card and the contractual terms governing that particular card.

Gift Card Restrictions Must Be Disclosed

One of the more important parts of Chapter 604 concerns disclosure.

Section 604.101 provides:

“An expiration date or policy, fee, or other material restriction or contract term applicable to a stored value card must be clearly and conspicuously disclosed at the time the card is sold or issued…”

Tex. Bus. & Com. Code § 604.101.

The stated purpose is to allow the purchaser to make an informed decision before buying the card.

Section 604.102 goes further for expiration provisions and periodic fees that reduce the remaining balance: those disclosures must also be legibly printed on the card.

These provisions illustrate an important feature of consumer law generally. The law does not always prohibit contractual restrictions. Sometimes it instead requires businesses to disclose those restrictions clearly enough that consumers know what they are purchasing.

What Happens If the Required Restrictions Were Not Disclosed?

Chapter 604 contains an unusually strong consequence.

Under § 604.103, a stored-value card sold without the required disclosure of an expiration provision, fee, material restriction, or other applicable contractual term is valid until redeemed or replaced.

In other words, a business generally cannot rely on an undisclosed restriction that the statute required it to disclose.

For consumers holding an old gift card that a business claims has expired, the circumstances surrounding the card's issuance and the disclosures accompanying it may therefore matter considerably.

Does Chapter 604 Automatically Give You a Lawsuit?

No—and this is an important distinction.

Texas Business & Commerce Code § 604.003 expressly states:

“This chapter does not create a cause of action against a person who issues or sells a stored value card.”

Tex. Bus. & Com. Code § 604.003.

That language matters.

A statute can impose legal requirements without necessarily creating a private right to sue for every violation of those requirements. Whether some other legal theory or statute applies to particular conduct is a separate question that depends upon the facts.

Consumers should therefore be cautious about assuming that every violation of Chapter 604 automatically produces a standalone civil lawsuit.

Why Would Texas Regulate Such a Tiny Amount?

At first glance, a law governing balances below $2.50 might seem trivial.

But gift cards present an unusual economic problem.

A customer may have technically paid for the remaining value, yet the amount can become too small to purchase anything meaningful from the merchant. If the consumer cannot recover the balance, small amounts of prepaid money can effectively become stranded.

Section 604.152 provides a simple solution for qualifying cards: once an in-person transaction leaves less than $2.50, the consumer can ask for the remainder in cash.

The Texas Legislature enacted the low-value redemption provision in 2015 through House Bill 2391. The legislative analysis described the measure as requiring a seller, at the consumer's request, to refund a remaining balance below $2.50 following an in-person redemption.

What Should Texas Consumers Do With Small Gift Card Balances?

If you have a small balance remaining on a store gift card, do not necessarily throw the card away.

If the card qualifies under Chapter 604, consider using it in person toward another purchase. If the transaction leaves less than $2.50 on the card, ask the merchant whether the remaining balance can be refunded in cash under Texas Business & Commerce Code § 604.152.

If the merchant says the card has expired or that fees have reduced its value, examine the card and any accompanying terms for the disclosures required by Chapter 604.

The precise rules can depend on the type of card involved.

The Bigger Lesson: Small Consumer Transactions Are Still Contracts

Gift cards may seem informal, but legally they represent something more interesting: a consumer has paid money now in exchange for the right to receive goods or services later.

Texas law consequently regulates some of the terms surrounding that transaction.

Chapter 604 addresses permissible fees, disclosures, expiration provisions, and the redemption of certain small remaining balances. And in one particularly useful provision, Texas law gives consumers a way to turn an otherwise nearly useless gift-card balance back into cash.

So the next time a cashier hands you a gift card with $1.83 remaining on it, you may have another option.

Ask for the $1.83.

Texas law may say it is yours.

This article is for general informational purposes only and does not constitute legal advice. The application of Texas law depends on the specific facts and circumstances involved. Consumers and businesses facing a dispute concerning stored-value cards, contracts, or consumer transactions should consult an attorney regarding their particular situation.

At David C. Barsalou, Attorney at Law, PLLC, we help clients navigate business, family, tax, estate planning, and real estate matters ranging from document drafting to litigation with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call us at (713) 397-4678, email barsalou.law@gmail.com, or reach us through our Contact Page. We’re here to help you take the next step.