Cal. Civ. Code § 1749.5 Compliance Featuring Kohl's Department Stores

Most Californians are unaware that gift cards having "a cash value of less than ten dollars ($10)" are "redeemable in cash for its cash value." Cal. Civ. Code § 1749.5(b)(2). Indeed, those many gift cards for whatever weird store your in-laws think you shop at can be redeemed after buying something nice to re-gift. After all, how hard is it to spend the exact same amount as your card is worth? With the retail pricing scheme and additional taxation that varies from region to region, it is virtually impossible to spend the exact same amount as your gift card is worth.

Recognizing this, the legislature adopted what is now Cal. Civ. Code § 1749.5(b) which provides as follows: "(b)(1) Any gift certificate sold after January 1, 1997, is redeemable in cash for its cash value, or subject to replacement with a new gift certificate at no cost to the purchaser or holder. (2) Notwithstanding paragraph (1), any gift certificate with a cash value of less than ten dollars ($10) is redeemable in cash for its cash value." Despite the relatively clear manner in which this provision is written, many retailers continue to purport policies that do not comport to this provision of law. See Kurtis Ming, Call Kurtis Undercover: California's Gift Card Refund Law, CBS Sacramento (May 21, 2014, 5:29 PM), http://sacramento.cbslocal.com/2014/05/21/call-kurtis-undercover-californias-gift-card-refund-law/.

One such instance of noncompliance was experienced by Madison & Associates' Miles Madison, who was attempting to redeem a "merchandise credit" from Kohl's Department Store's Irvine, California location ("Kohl's Irvine"). The story begins simple enough: Mr. Madison received a pair of boots as a gift. These boots were defective however and, as a result, Mr. Madison sought an exchange. Kohl's Irvine did not have any of the same boots that Mr. Madison sought. Accordingly, Mr. Madison received a refund in the form of a merchandise credit in lieu of a direct refund to the original purchaser's credit card.

After returning to shop at Kohl's Irvine several weeks later Mr. Madison used the majority of his merchandise credit, leaving less than $10.00 on his merchandise credit. Knowing Cal. Civ. Code § 1749.5(b) by heart, Mr. Madison requested his merchandise credit be redeemed in cash. Steve, Kohl's Irvine's self-described "store manager," refused, stating that "Kohl's does not issue refunds for merchandise credits." When confronted with the text of state law, Steve conceded that a merchandise credit will only be refunded "where two to three dollars ($2.00 to $3.00) are remaining on the gift certificate." Despite explaining the ludicrous nature of such a policy - which effectively allowed Mr. Madison to purchase a gift card utilizing his merchandise credit and then redeeming that gift card - Steve refused to provide a cash redemption in accordance with Cal. Civ. Code § 1749.5(b).

Recognizing Kohl's Irvine's "awkward and legally unsound interpretation" of Cal. Civ. Code § 1749.5(b), this office wrote Kevin Mansell, CEO of Kohl's Department Stores, on December 15th, 2014 to request clarification concerning this policy. In response, Elizabeth F. McCright, Director of Corporate Law for Kohl's Department Stores, outlined in her December 23rd, 2014 response that, "Kohl's Gift Card redemption policy comports with this requirement by requiring our associates to initiate a cash refund of any Gift Card balance falling below ten dollars upon a customer's request. Although we conduct periodic associate training on this policy, we have taken this opportunity to reach-out to the store manager at the Kohl's Irvine store to remind him of the proper procedure. We also reminded him that Kohl's cash redemption policy applies both to Gift Cards and to Kohl's Merchandise Credit (issued in certain return transactions), since you indicated that was a source of confusion on the part of this particular associate." Furthermore, Ms. McCright went on by indicating that, "While Kohl's regret that you did not experience the level of customer service for which we strive, Kohl's is confident that its existing policies comply with California law. As part of our regular, ongoing training, we will continue to ensure our associates are aware of Kohl's policy and procedures."

To this end, Ms. McCright offered to  "redeem the cash balance on [Mr. Madison's] Kohl's Merchandise Credit." It would not be a lawlerly letter without a final reservation of rights: "This letter does not serve as an admission by Kohl's; any wrongdoing by Kohl's is expressly denied." Nonetheless, Mr. Madison has since accepted this offer and remittance of a cash refund is now pending. (Source Documents)