In plastic surgery practices, gift cards are often used to support promotions, encourage patients to prepay for services, and introduce new patients to the practice. Because they are commonly viewed as straightforward transactions, practice owners may overlook the legal, financial, and operational considerations that can accompany a gift card program.
Without the right policies and processes in place, a gift card program can create unexpected issues, ranging from consumer protection concerns and financial liabilities to patient care issues when circumstances change after a purchase is made.
This article explores the most common risks associated with gift card programs and outlines practical steps plastic surgery practices can take to reduce those risks.
Understanding Gift Card Programs in Plastic Surgery Practices
For most practices, gift cards serve as a marketing tool or a way to collect payment for future services. However, selling a gift card can also create responsibilities and considerations that many practice owners do not anticipate.
Depending on how a gift card program is structured, gift cards may be viewed as:
- A consumer product subject to federal and state gift card laws
- A prepaid medical service
- A financial liability that remains on the practice’s books until services are provided or the balance is otherwise resolved
Gift cards can impact several different areas of a practice, and the risks generally fall into three categories: legal and regulatory, financial, and operational. Understanding each of these categories is an important first step toward building a program that supports both growth and compliance.
Legal Risks Associated with Gift Card Programs
Many plastic surgery practices focus on the marketing benefits of gift cards but overlook the legal requirements that may apply once the cards are sold. Consumer protection laws and unclaimed property requirements can create compliance issues that vary by state and may continue long after a gift card is purchased.
How Consumer Protection Laws Impact Gift Card Programs
Federal and state consumer protection laws can influence how gift cards are issued, marketed, redeemed, and even whether certain restrictions can be placed on their use.
Common areas that may create compliance concerns include:
- Expiration dates
- Required disclosures
- Service or dormancy fees
- Refund rights
- Redemption requirements
For practices operating in multiple states, gift card laws may differ from one jurisdiction to another, making compliance more complex.
Common Consumer Protection Issues in Gift Card Programs
Issues with consumer protection laws often stem from operational oversights, such as:
- Setting gift card expiration dates that do not meet legal requirements
- Failing to clearly disclose usage terms before a patient purchases a gift card
- Assuming gift card software settings automatically meet legal requirements
- Handling gift card purchases and redemptions differently across locations
- Believing that standard industry practices automatically meet applicable legal requirements
Practices can avoid many of these issues by implementing gift card programs with compliance in mind and periodically reviewing their policies, procedures, and program terms to maintain compliance over time.
Escheatment and Unclaimed Property Requirements
In addition to the rules governing how gift cards are offered and used, practices should understand what can happen when gift cards remain unused for long periods of time. It is easy to assume that if a patient never redeems a gift card, the remaining balance simply stays with the practice.
However, in some states, unredeemed gift card funds may be subject to unclaimed property laws. These laws can require businesses to report certain unclaimed funds and, in some cases, transfer those funds to the state after a specified period of inactivity. This process is commonly known as escheatment.
Potential consequences of not complying with unclaimed property laws include:
- State audits
- Penalties
- Interest assessments
- Administrative burdens
Because state laws differ, practices should understand the requirements that apply wherever gift cards are sold or redeemed. Maintaining accurate records can help practices determine whether those rules apply and what steps may be required.
Financial Exposure Created by Gift Card Programs
Outstanding gift card balances can also affect a practice’s financial reporting, making it important to understand how those balances are tracked and reflected in the practice’s financial records. When a patient purchases a gift card, the practice receives payment but still owes future services. Because the services have not yet been provided, those funds may need to be treated differently than revenue from services that have already been completed.
Without proper tracking, outstanding gift card balances can affect:
- Financial reporting
- Profitability calculations
- Balance sheet liabilities
- Practice value
- Lending discussions
- Business planning
For practices with large gift card programs, the financial impact can become significant. Outstanding balances may remain on the books for years, particularly when gift cards are used for higher-dollar procedures with longer decision-making timelines.
Liabilities During Practice Sales and Transactions
Gift card liabilities can become an important consideration during practice sales, when bringing on investors, and other significant business changes.
As part of the review process, buyers, investors, and lenders often look closely at a practice’s outstanding liabilities. Gift card balances that have not been properly tracked or logged in financial records can affect how the practice is valued and create unexpected issues during negotiations.
Because some gift cards may remain unused for years, practices should understand how those liabilities appear in their financial records and how they may affect future business transactions.
Patient Care and Operational Challenges for Gift Card Programs
Beyond legal and financial considerations, practices should also think about what happens when plans change after a gift card has been purchased.
Examples may include:
- Surgical procedures that are ultimately canceled
- Patients who are no longer appropriate candidates for treatment
- Providers leaving the practice
- Services that are no longer offered
- Equipment or technology that is no longer available
When situations like these arise, the service a patient originally intended to purchase may no longer be an option. As a result, questions often come up about refunds, credits, transfers, or whether the gift card can be used toward a different service.
This is especially important in plastic surgery, where gift cards may be tied to a specific procedure, and there may be months between the purchase and treatment date. The longer that timeline, the greater the chance that circumstances may change for the patient or the practice.
Because these situations can be difficult to predict, it is often easier to address them in advance through clear policies rather than trying to decide what to do after an issue arises.
Why Gift Card Policies Matter
Many gift card-related issues can be traced back to inconsistent processes or unclear expectations. Written policies help establish a consistent approach for patients and staff while providing guidance when unexpected situations occur.
Gift card policies should be tailored to the practice and address topics such as:
- Eligible services
- Redemption procedures
- Refund requests
- Expiration and disclosure language
- Surgical cancellations
- Provider departures
- Discontinued services
- Record retention requirements
- Tracking and reconciliation responsibilities
The goal is to establish clear expectations before a problem arises rather than trying to come up with a solution after the fact. Once those policies are in place, they should be reviewed periodically to ensure they continue to align with the practice’s operations, staffing, and legal requirements.
What Plastic Surgery Practices Should Know About Gift Card Programs
The risks associated with gift card programs do not always stem from the gift cards themselves. More often, questions and complications arise when practices do not anticipate how gift cards will be handled as circumstances change, balances remain unused, or questions arise regarding refunds, redemptions, and other program terms.
Before launching or expanding a gift card program, practices should consider the following:
Gift Card Risks Can Extend Beyond the Initial Purchase
What starts as a simple purchase can raise questions about consumer protection laws, financial reporting, unused balances, and how the practice handles unexpected situations.
Unredeemed Gift Cards Can Affect a Practice’s Finances
Depending on state law, unredeemed balances can create liabilities and may influence financial reporting, lending discussions, business planning, and future transactions.
Changes in Patient Care Can Complicate Gift Card Programs
Cancellations, provider departures, discontinued services, and treatment eligibility issues can create questions about how gift cards should be handled.
Written Policies Help Set Expectations for Patients and Staff
Establishing clear guidelines in advance can help staff respond to common issues involving redemptions, refunds, credits, and transfers.
Gift Programs Need Ongoing Review
As a practice grows and laws evolve, periodic review can help ensure the program still works as intended.
How ByrdAdatto Helps Plastic Surgery Practices Manage Gift Card Programs
A gift card program may seem simple at first, but things do not always go according to plan. Unused balances, refund requests, provider departures, and other unexpected situations can create questions about how a gift card should be handled. Taking the time to think through these issues in advance can help practices set clear expectations and avoid unnecessary confusion later.
ByrdAdatto works with plastic surgery practices to address questions as they arise and help practice owners proactively manage risk. Whether you are implementing a gift card program, revising existing policies, or navigating questions about refunds, unredeemed balances, and patient requests, the legal considerations do not end once the program is in place.
Contact ByrdAdatto to discuss your gift card program and how to address potential challenges before they arise.
