By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
Medical spas typically see an uptick in sales of gift cards during the holiday season. And although selling or giving away gift cards may seem like simple transactions, the fact that medical spas are medical institutions does complicate matters a bit from a legal standpoint. Following are a few things about distributing gift cards that medical spa owners and operators should keep in mind.
First and most importantly, there are federal regulations that govern gift cards. The Credit Card Accountability Responsibility and Disclosure Act of 2009 includes provisions that protect consumers from fraudulent and predatory practices by those who sell gift cards. According to the Federal Trade Commission (FTC) consumer information website:
• "Money on a gift card cannot expire for at least five years from the date the card was purchased, or from the last date any additional money was loaded onto the card. If the expiration date listed on the card is earlier than these dates, the money can be transferred to a replacement card at no cost."
• "Inactivity fees can be charged only after a card hasn't been used for at least one year, and you can be charged only once per month. But you may be charged a fee to buy the card or to replace a lost or stolen card."
• "The expiration date of a card must be clearly disclosed on the card, and fees must be clearly disclosed on the card or its packaging."
If your gift cards do not meet these standards, you certainly should do what you can to amend them. The FTC responds to consumer complaints regarding gift cards from retailers, and you don’t want to run afoul of it.
Also, gift cards for medical spas fall into a bit of a strange grey area due to the corporate practice of medicine, a doctrine observed by many states that dictates that only a physician or physician-owned corporation can receive payment for medical services. Since many of the treatments offered at medical spas are medical in nature, the ownership of these practices is governed by this doctrine. To see if your state follows the corporate practice of medicine check your state’s medical aesthetic legal summary.
As it relates to gift cards, this means that the payment for the gift cards must be made in full to a physician or physician-owned corporation; otherwise, the practice has engaged in fee-splitting, which is illegal in most states.
Also, you may wish to reward employees or customers who bring in business with gift cards, but doing so in a medical setting, such as a medical spa, can represent a violation of state and federal anti-kickback laws, which prohibit practices from paying for referrals. Because gift cards have a cash value attached to them, they can be viewed as representing a kickback and, therefore, expose the practice to legal action.
A medical spa owner or operator must be mindful when he or she is giving out gift cards. If the person who receives the card is not paying for it, there must be clear understanding that is not being given for any business-related purpose. If you give gift cards only as tokens of your appreciation, you should be fine.
The holiday season is meant to be a joyous time; keep it that way by understanding and observing the rules and regulations related to gift card distribution.