Can a Prepaid Treatment Package Expire? The Gift Card Test, Four State Statutes, and the Money That Is Not Yours

Whether a prepaid treatment package can carry an expiration date is decided by two tests running at the same time, not one. The federal test asks whether what you sold was issued in a specified dollar amount. Several state tests do not ask about amounts at all.

The received wisdom in med spa circles is that the federal gift card rules are a retail problem and treatment packages sit outside them. That is half right, and the half that is wrong is the expensive half. The Consumer Financial Protection Bureau's Official Interpretation of Regulation E uses a spa treatment as its worked example twice, once on each side of the line.

This post quotes the federal comment in both halves, sets out what California, New York, Florida and Texas each require with the section numbers, and runs one hypothetical policy through all four. It also names the two places where the primary sources run out, because for an undenominated six-session package they run out in California and in Texas.

Every source on this page was read on 19 August 2026. We make med spa software, so we have an obvious interest in how clinics record and prove prepaid balances. The statutes and interpretations below apply regardless of whose software you run them in.

Regulation E's gift card rules bind a med spa, not only a bank

Most of Regulation E speaks to financial institutions. Section 1005.20 does not. 12 CFR 1005.20(d) reads "No person may impose a dormancy, inactivity, or service fee," and 1005.20(e) reads "No person may sell or issue a gift certificate, store gift card, or general-use prepaid card with an expiration date," subject to the conditions that follow. The operative word in both prohibitions is "person," and 1005.20(c)(3) reaches "a person that issues or sells such certificate or card." A clinic that sells a covered instrument is inside the rule.

Where the rule applies, it sets a floor rather than a ban. Under 12 CFR 1005.20(e)(2), the expiration date for the underlying funds must be at least the later of five years after the date the certificate was initially issued or the date funds were last loaded, or the certificate or card expiration date if any. The five-year clock therefore restarts on a top-up, not only at first sale. Section 1005.20(e)(1) separately requires policies that give the buyer a reasonable opportunity to purchase a certificate with at least five years remaining. The statutory basis is 15 U.S.C. 1693l-1(c)(2)(A), added by the Credit CARD Act of 2009.

This is settled text. The eCFR version history for 12 CFR 1005.20 shows the section was last substantively amended on 1 January 2017, and a Federal Register search for rules amending the gift card section since 1 January 2024, run on 19 August 2026, returned no such rule.

The specified amount test, quoted from comment 20(a)-3

The whole federal question turns on one comment in the Official Interpretations to Part 1005. Comment 20(a)-3 addresses cards, codes and devices redeemable for a specific good or service, and it is worth reading in full rather than in the half that circulates in industry content.

"Certain cards, codes, or other devices may be redeemable upon presentation for a specific good or service, or 'experience,' such as a spa treatment, hotel stay, or airline flight... Such cards, codes, or other devices generally are not subject to the requirements of this section because they are not issued to a consumer 'in a specified amount' as required under the definitions of 'gift certificate,' 'store gift card,' or 'general-use prepaid card.'"

The spa treatment is the first of the three examples the Bureau chose. But the same comment then uses a spa treatment a second time, on the other side of the line, in the form of "a certificate or card redeemable for a spa treatment up to $50," and adds that "if the card, code, or other device states a specific monetary value, such as 'a $50 value,' the card, code, or other device is subject to this section, unless an exclusion in section 1005.20(b) applies."

Two words in that passage do a great deal of work. The first is "generally." The comment does not say service packages are exempt, and it does not use the word "package" at all. It says such devices generally are not subject to the section. The second is the trailing conditional. A denominated instrument is covered only until one of the six exclusions in 1005.20(b) applies to it. Anyone quoting only the first half of comment 20(a)-3 is misreporting the source. The full text is published by the CFPB in its Official Interpretations to Regulation E section 1005.20.

Six sessions or a dollar balance, and how you hand it over

The table below shows how the wording on the instrument and the way you deliver it change the federal status of the same sale, with the citation for each row.

The delivery rows are the sharpest line in the federal scheme. 12 CFR 1005.20(b)(5) excludes an instrument "Issued in paper form only," and comment 20(b)(5)-1 explains that "the sole means of issuing the card, code, or other device must be in a paper form," and that a paper certificate stays inside the exclusion "regardless of whether it may be redeemed electronically." Comment 20(b)(5)-2.iv takes the opposite case, holding that an electronically provided code the consumer prints at home is not excluded, "because the bar code or card or certificate number was issued to the consumer in electronic form." Comment 20(a)-1 covers the common med spa workflow: a merchant that emails a code redeemable in a specified amount online or in store has issued a covered instrument.

Treat that as a federal fact and nothing more. No paper-only exclusion appears in the California, New York or Florida definitions as those sections read on 19 August 2026, and each of them reaches electronic instruments expressly, so moving to paper certificates changes the federal answer and changes nothing in those three states. It is not a compliance route.

One more exclusion gets cited loosely. 12 CFR 1005.20(b)(4) excludes an instrument "Not marketed to the general public," and the examples in the interpretation are insurance proceeds, merchandise-return store credit and tax refund disbursements, all payout mechanisms rather than advertised products. Comment 20(b)(4)-2.iii holds that a card marketed to and sellable by any member of the public does not qualify. We found no comment addressing a package offered only to existing patients, read on 19 August 2026. Do not build a policy on it.

State law adds a second test, and the stricter one wins

State gift certificate law does not replace the federal test. 15 U.S.C. 1693q says the subchapter "does not annul, alter, or affect the laws of any State relating to electronic fund transfers, dormancy fees, inactivity charges or fees, service fees, or expiration dates of gift certificates... except to the extent that those laws are inconsistent with the provisions of this subchapter, and then only to the extent of the inconsistency," and adds that "A State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection afforded by this subchapter." 12 CFR 1005.12(b) gives the Bureau the same inconsistency-determination role. Both regimes run at once, and the more protective one binds you.

The table below compares the four states on the questions an owner actually has to answer, with the governing statute in each row.

New York is the row most often reported wrongly. N.Y. Gen. Bus. Law 396-i(1)(a)(1)(ii) defines a gift certificate as a pre-funded record that "is issued in a specified amount," which is the federal test almost word for word. A six-session package with no dollar figure on it is likely outside 396-i for the same reason it generally falls outside Regulation E. Where 396-i does apply, subsection (5-a) sets the nine-year floor, subsection (5)(a) bans the long list of fees, and subsection (3) requires the terms and conditions to be conspicuously printed on the certificate, on the packaging with a toll-free number for the full terms, or on an accompanying document.

Florida is the cleanest case in the piece. Fla. Stat. 501.95(1)(b) defines a gift certificate as an instrument "purchased for monetary consideration when the certificate, card, or similar instrument is redeemable for merchandise, food, or services," with no specified-amount requirement anywhere in it. Section 501.95(2)(a) then provides that such an instrument "may not have an expiration date, expiration period, or any type of postsale charge or fee." Florida reaches an undenominated treatment package on the face of the statute, and it prohibits the policy outright.

California's cash-redemption number changed recently and most published summaries are stale. Cal. Civ. Code 1749.5(b)(2) now reads that "a gift certificate with a cash value of less than fifteen dollars ($15) is redeemable in cash for its cash value." Senate Bill 22 (Laird), Stats. 2025 Ch. 207, was approved on 1 October 2025, repealed the prior section that read $10, and the replacement became operative on 1 April 2026. Any summary written before October 2025 still says $10.

Texas permits an expiration date, and the duty attached is two-part. Tex. Bus. & Com. Code 604.101 requires clear and conspicuous disclosure at the time of sale "to enable the person to make an informed decision before purchasing the card," and 604.102 requires the expiration disclosure to be legibly printed on the card itself. Section 604.103 makes a card sold without that disclosure valid until redeemed or replaced. Section 604.003 states that the chapter "does not create a cause of action against a person who issues or sells a stored value card," and Texas law does not switch off Regulation E, so a covered denominated instrument still carries the federal five-year floor on top.

Run a twelve-month expiration through all four statutes

We found no government dataset, peer-reviewed study or trade-association survey measuring how long med spa packages actually run before they expire, searched on 19 August 2026, so treat every range you have seen quoted as unsourced. Instead, take one concrete policy and test it: a $1,200 laser credit, sold to a patient for their own use, emailed as a code, expiring twelve months after purchase.

Federally, that instrument states a specific monetary value, so under comment 20(a)-3 it is covered unless an exclusion in 1005.20(b) applies. It was emailed, so comment 20(b)(5)-2.iv keeps it out of the paper-only exclusion. A twelve-month expiry on the underlying funds sits well below the five-year floor in 1005.20(e)(2).

In California, if that credit is a gift certificate under Title 1.4A, selling it with an expiration date is unlawful under Cal. Civ. Code 1749.5(a)(1), and 1749.5(d) provides that a certificate sold without an expiration date is valid until redeemed or replaced. In New York, the credit is denominated, so 396-i(5-a) puts the earliest lawful expiry at nine years. In Florida, 501.95(2)(a) prohibits the expiration date and the expiration period whether or not a dollar figure appears. In Texas, chapter 604 permits the twelve-month term as a matter of state law if you disclose it at sale and print it on the card, though the federal five-year floor above still sits on top of this denominated instrument, and Tex. Prop. Code 72.1016(b) then treats that same date as the abandonment trigger.

Change one variable and the analysis moves. Sell the identical value as "six laser sessions" with no dollar figure, and the federal answer flips to generally outside the section, New York likely follows, Florida still prohibits the expiry, and California and Texas turn on a definitional question their own codes do not answer.

Escheat, and where the balance stops being yours

Unclaimed property law is the second half of this subject and it does not track the expiration rules. The table below shows what happens to an unredeemed balance in each of the four states.

Start with the correction most operators need. Escheat under these statutes is custodial. The balance stops being the clinic's and is handed to the state, which holds it for the patient. Fla. Stat. 717.1045(3) uses the word directly, stating the legislative intent that the section "apply to the custodial holding of unredeemed gift certificates and credit memos," and Cal. Code Civ. Proc. 1520(b) requires the holder's notice to tell the owner about "the need to file a claim in order for the owner's property to be returned to the owner."

Texas inverts the intuition that an expiration date protects revenue. Tex. Prop. Code 72.1016(b) presumes abandonment on the earlier of the expiration date or the third anniversary, so adding an expiry pulls the escheat forward rather than letting you keep the money. Run the chain the other way and Tex. Bus. & Com. Code 604.002(5) takes a card that "does not expire and for which the seller does not charge a fee other than a fee described in Section 604.051" outside chapter 604, and Tex. Prop. Code 72.1016(a)(1) then takes it outside the escheat section as well. In Texas, removing the expiration date is what keeps the balance on your books.

Texas also decides where the money goes when your records are thin. Tex. Prop. Code 72.1016(c) provides that if the seller "does not obtain the name and address of the apparent owner of the card and maintain a record of the owner's name and address and the identification number of the card, the address of the apparent owner is considered to be the Austin, Texas, address of the comptroller." Poor record keeping does not make the liability disappear. It routes it to the state by default. Section 72.1016(d) separately bars charging any fee against the card once it is presumed abandoned.

California's escheat position is the reverse of what most content asserts. Cal. Code Civ. Proc. 1520.5 provides that the general escheat section "does not apply to gift certificates subject to Title 1.4A," then adds that it does apply to a gift certificate "that has an expiration date and that is given in exchange for money or any other thing of value." Adding the expiry is the act that pulls a California certificate into escheat, and it is separately unlawful under 1749.5(a)(1). For property that is inside escheat, Cal. Code Civ. Proc. 1520(b) requires written notice for property valued at $50 or more, sent not less than six nor more than twelve months before it becomes reportable, headed "THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US."

What happens to prepaid balances when a clinic closes or is sold

California legislates the premise directly. Cal. Civ. Code 1749.6(a) provides that "A gift certificate constitutes value held in trust by the issuer of the gift certificate on behalf of the beneficiary of the gift certificate. The value represented by the gift certificate belongs to the beneficiary, or to the legal representative of the beneficiary to the extent provided by law, and not to the issuer." Section 1749.6(b) requires an issuer in bankruptcy to keep honoring certificates issued before the petition.

The limits inside the same section matter as much as the headline. Cal. Civ. Code 1749.6(c)(2) provides that the section does not require the issuer to redeem for cash, to replace a lost certificate, or to "Maintain a separate account for the funds," and 1749.6(d)(1) and (d)(2) provide that it creates no interest in specific property and "does not create a fiduciary or quasi-fiduciary relationship." It is a trust in name with no segregation duty attached.

New York addresses the wind-down case in the gift certificate statute itself. N.Y. Gen. Bus. Law 396-i(1-a) provides that an entity issuing gift certificates or store credits, or conducting a "closing out sale" or "defunct business sale" as defined in section 581 of that chapter, may not refuse to accept the certificate in payment for goods or services bought primarily for personal, family or household purposes, including goods or services sold under a liquidation or close-out, provided it is presented before any stated expiration. Section 396-i(2) separately bars altering the terms of a certificate after issuance, which answers any plan to shorten expiry on balances already sold.

In bankruptcy, patients who prepaid get a capped priority rather than a guarantee. 11 U.S.C. 507(a)(7) gives seventh priority to individual claims arising from a pre-petition deposit for services for personal, family or household use that were not provided. The figure printed in the Code is stale by design, because 11 U.S.C. 104 adjusts it every three years. The Judicial Conference notice at 90 FR 8941, published 4 February 2025, raised the 507(a)(7) amount from $3,350 to $3,800 per individual, effective 1 April 2025, with the next adjustment due 1 April 2028. That is a cap on the priority, not an assurance the claim gets paid.

What your agreement has to say and your records have to prove

None of the above is a software question until you try to evidence it two years later. Here is the requirements list these statutes generate, stated as things your clinic needs to be able to do in every state it operates in.

• Record whether each package was sold as a number of sessions or as a dollar balance, because that single wording choice decides the federal test under comment 20(a)-3 and the New York test under 396-i(1)(a)(1)(ii).

• Record the delivery form and date, paper only or electronic, since 12 CFR 1005.20(b)(5) and comment 20(b)(5)-2.iv turn on it federally.

• Store the purchaser's name, address and a unique package identifier, because Tex. Prop. Code 72.1016(c) deems the owner's address to be the comptroller's Austin address when you cannot produce those three items.

• Put the terms on the instrument or on an accompanying document, and post the point-of-sale notice, to meet N.Y. Gen. Bus. Law 396-i(3) and 396-i(2-a).

• In Texas, disclose any expiration at sale and print it on the card, since 604.103 makes an undisclosed card valid until redeemed or replaced.

• Freeze the terms at issuance and version them, because 396-i(2) bars altering terms after the certificate is issued.

• Run a dormancy clock per state and per instrument type, with New York carrying both the five-year and three-year readings until one is resolved.

• Generate the Cal. Code Civ. Proc. 1520(b) owner notice for property valued at $50 or more, six to twelve months before it becomes reportable, with the required capitalised heading.

• Keep a session-level redemption ledger with dates, so the remaining balance is provable rather than reconstructed.

Most of that is ordinary record keeping that a clinic can specify when it chooses a system. If you are scoping this, the same data model carries membership and package balances together, which is why we treat prepaid balance tracking as part of med spa membership software rather than a bolt-on, and why the purchaser record belongs in your client management system rather than in a spreadsheet on the front desk. The accounting side of the same money, deferred revenue and breakage under ASC 606, is covered in our post on med spa membership program pricing, and the cost of getting this out of paper is in what med spa software costs.

Frequently asked questions

Can a med spa package legally expire?

It depends on how the package is worded and which state you sell it in. Under Comment 20(a)-3 to 12 CFR 1005.20, a package redeemable for a specific service and not issued in a specified dollar amount generally falls outside the federal gift card rules. A package stating a dollar value is covered unless an exclusion in 1005.20(b) applies, and then the funds cannot expire sooner than five years. State law runs alongside the federal rule, and Florida prohibits expiration dates on instruments redeemable for services outright under Fla. Stat. 501.95(2)(a).

Does the federal CARD Act apply to a package of treatments?

Only if the instrument states a specified amount. The gift card provisions from the Credit CARD Act of 2009 are codified at 15 U.S.C. 1693l-1 and implemented at 12 CFR 1005.20. Comment 20(a)-3 says devices redeemable for a specific good, service or experience, such as a spa treatment, generally are not subject to the section because they are not issued in a specified amount. The same comment covers a certificate redeemable for "a spa treatment up to $50," so a dollar figure changes the answer.

Is an expiration date on a prepaid package allowed in Texas?

Texas law permits an expiration date on a stored value card if it is clearly and conspicuously disclosed at the time of sale under Tex. Bus. & Com. Code 604.101 and legibly printed on the card under 604.102. A card sold without that disclosure is valid until redeemed or replaced under 604.103. Two things travel with that permission. If the instrument is a covered gift certificate, the federal five-year floor in 12 CFR 1005.20(e) still applies, and Tex. Prop. Code 72.1016(b) makes the expiration date the abandonment trigger.

What happens to unredeemed package value in California?

Cal. Civ. Code 1749.5(a)(1) makes it unlawful to sell a gift certificate containing an expiration date, and 1749.5(d) provides that a certificate sold without one is valid until redeemed or replaced. Cal. Civ. Code 1749.6(a) goes further, stating that the value "belongs to the beneficiary... and not to the issuer." The same section says it does not require a separate account and creates no fiduciary relationship. Whether an undenominated session package is a gift certificate under 1749.45(a) is not resolved by the statute.

Do I have to turn unclaimed package balances over to the state?

It varies by state and the holding is custodial, meaning the state holds the money for the patient rather than owning it. Florida is the outlier in the issuer's favour: Fla. Stat. 717.1045(1) states the consideration paid "is the property of the issuer." New York reports to the state after five years for gift certificates under Aband. Prop. Law 1315(1) or three years for amounts received for services not rendered under 1315(1-b). Texas reports on the earlier of the expiration date or the third anniversary.

Does emailing the package voucher change the legal status?

Federally, yes. 12 CFR 1005.20(b)(5) excludes an instrument "Issued in paper form only," and Comment 20(b)(5)-2.iv holds that a code provided electronically and printed at home is not excluded because the number was issued in electronic form. Comment 20(a)-1 says an emailed code redeemable in a specified amount is covered. That is a federal distinction only. The California, New York and Florida definitions each reach electronic instruments expressly, so delivery method changes nothing in those states.

How long can a New York gift certificate last before the funds expire?

N.Y. Gen. Bus. Law 396-i(5-a) makes it unlawful to sell or issue a non-promotional gift certificate whose underlying funds expire earlier than the later of nine years after issuance or the date funds were last loaded, and the terms of expiration must be clearly and conspicuously stated. Section 396-i(5)(a) bans activation, dormancy, service and similar fees, with one exception for a single activation fee capped at nine dollars on an open-loop certificate. Balances under $5 on a closed-loop certificate are redeemable in cash under 396-i(5-b).

What should a med spa package agreement say?

State whether the package is a number of sessions or a dollar balance, because that decides which rules apply. State the expiration terms, if any, conspicuously, which New York requires under 396-i(3) and Texas requires at sale under 604.101 and on the card under 604.102. Record the purchaser's name, address and a package identifier, which Texas effectively requires through Prop. Code 72.1016(c). Do not reserve a right to change terms later, since N.Y. Gen. Bus. Law 396-i(2) bars altering the terms of an issued certificate.

This is a summary of published statutes and regulations read on 19 August 2026, not legal advice. Expiration terms, dormancy periods and unclaimed property duties vary by state and change, as California's did on 1 April 2026. Have counsel in each state you operate in review your package agreement before you sell the next one.