It depends on how you frame it and advertise it, if you sell it as a gift card or gift certificate (or it could be considered as such, based on how you sold it) you may have to honor it for up to 5 years based on the CARD act passed by the government.
If instead you frame it as a contract for services and allow them to choose any dates within a *clearly* specified time frame you would generally be in the clear.
In some states though you are obligated to refund the sessions that expire. You can’t collect funds for undelivered services. Groupon just went through a large class action suit over this.
This question is similar to one that I just posted an answer for, so I am pasting the answer again here.
I sold packages at one time some years ago. It was to stimulate clients to purchase more session and give them a chance to get more for their money. They received a written agreement to sign that included a section on refunds that stated something like, “if a refund is requested the fee per session for sessions already attended is raised to the single session rate at the time the session was attended”. This stopped people wanting to get cheaper sessions for less sessions than agreed to in the package from taking advantage of my good intentions.
I later adopted a “no refund” policy. And now I don’t sell packages of sessions. I assess clients’ needs and then present them with a plan of action to approach improving their fitness. The plan is re-evaluated continuously throughout the time that they are working with me. The clients can pay as they go or for any number of sessions at one time, but I no longer discount for multiple session purchases. Clients are charged according to how much of my time and knowledge must be utilized in developing and implementing their program. Once they agree to a program and schedule sessions on my calendar, it is agreed that they will pay for all scheduled sessions in advance and there are no refunds. The payment locks in my time and their time. Paying for sessions ahead of time secures that spot on my calendar for them, but it also inhibits me from offering that time to anyone else. If they choose to schedule one session at a time, then they have less options on when they can get on the schedule. Many opt to pay for 4 to 6 sessions at a time and purchase more again as they see the calendar filling up in the future. Clients can change dates if they need to do so, but must make changes at least 48 hours before the session to be changed. I can’t offer that time to anyone else until they inform me it needs to be changed and less notice makes it very hard for me to get someone into that spot.
So, there is no need for expiration dates. It is on the calendar and the fee is still paid whether the client uses the session or not.
I have Packages of – 1 class
I have mostly “Standing Clients” – either 2 days per week or 3 days per week. I also require a 24 hour cancellation or charges are applied to their class card.
I have no expiration dates on these and it is really making me crazy. Some people are really good about coming each time, but some are gone weeks at a time and are not being charged because they’ve told me 24 hour ahead when they will be gone. I’m afraid it will anger them if I institute a “cancellation policy”, but I really do need to . I also am not sure how to apply it to each package, and how many “Standing” appts the client has per week.
Can you help me find a way to make this sound OK to my clients? The way it is now I NEVER know what my income will be each month. It’s very anxiety provoking…..
any advice and the more specific the better, would be appreciated so much!