Those who receive a gift card are no doubt excited to redeem it. California Civil Code Section 1745(a) guarantees that all cards are valid until redeemed or replaced, unless their value is under $5 or if the card was not used for 24 months. Taco Bell ignored the law and, as a result, will have to pay $85,000 because it refused to honor gift cards with balances below $10.

Ventura County District Attorney Eric Nasarenko announced on June 14, that Taco Bell entered into a stipulated judgment with his office that will cover its civil penalties, costs and restitution for failing to redeem valid gift cards because their remaining value was low. A stipulated judgment is a written agreement between the parties. It was signed by Ventura County Superior Court Judge Benjamin F. Coats on June 8.

The complaint filed on June 2 on behalf of the people of California by the district attorneys in Ventura, Los Angeles and Sonoma counties alleged that “Beginning on an exact date unknown to Plaintiff, but commending within the past four years, and continuing to the present, Defendants engaged in…unfair competition as defined in (California’s) Business and Professional Code, section 17200.” This section, also known as California’s Unfair Competition Law (UCL) prohibits unfair, unlawful, fraudulent, deceptive, or misleading business acts or practices.

Gift cards for certain amounts of money must therefore be worth those amounts. But Taco Bell denied California consumers the right to use cards for food purchases under $10 or to receive cash refunds for cards with these low balances.

In a press release from Nasarenko’s office on June 14, Senior Deputy District Attorney Andrew Reid, a member of the Ventura County District Attorney’s Office said, “Gift card redemption laws ensure that large corporations do not profit, at the expense of the consumer, off unspent dollars that consumers cannot or do not wish to use at that retailer.” Reid said, “In California, consumers have the right to receive unspent gift card amounts less than $10 so that they can use that money as they wish.”

Los Angeles District Attorney George Gascon told ABC News, “Businesses have a responsibility to honor their customer’s gift cards, regardless of the amount. This settlement sends a clear message that companies like Taco Bell must abide by the law and treat their customers fairly.

According to Nasarenko, Irvine-based Taco Bell will pay $45,000 in civil penalties, $30,500 in investigative costs, and $10,000 to the California Consumer Protection Trust Fund. In addition, the settlement forbids Taco from engaging in further violations of Civil Code 1749.5. To this end, it requires that the fast food chain's franchise locations post “visible notices near cash registers” that inform customers about their redemption rights and how to enforce them.

The settlement requirement will also mandate that future Taco Bell gift cards include information that can direct cardholders to the restaurant’s corporate website, to assist them in obtaining their rightful redemption amounts. In addition, gift card holders may receive cash back for their balances under $10. Those wishing for cash are given a link to a Taco Bell website.

A final part of the stipulated judgment requires Taco Bell to “provide annual training” to restaurant managers and trainees and to monitor all those who are affected to assure compliance.

Taco Bell denied wrongdoing or violating California’s Civil Code even though they signed the settlement. The company is facing other legal problems as well. In July 2022, a million-dollar lawsuit was filed against the company in Texas after two customers claimed that one of its managers poured boiling water on them. And in 2020, Twitter posters called for a boycott when one Ohio man was fired from a job at a Taco Bell franchise for wearing a face mask that said “Black Lives Matter.”

Apparently, Taco Bell customers are not the only ones who might experience gift card issues. Amazon, Google, and Apple among others all have websites devoted to redemption problems and how to resolve them. Meanwhile, check your Taco Bell gift cards and remember that two grilled cheese burritos or five soft tacos can all be purchased with balances of $10 or less.