Podcast

Selling gift certificates online and in person can be a great way to recruit new clients and make gift-giving convenient for your current clients. Navigating the state and legal requirements for gift certificate sales can be tricky. Allissa lays out some not-legal-advice tips and gives a handful of resources to consult.

This episode is sponsored by:

• Mother Earth Pillows
• Center for Barefoot Massage

Resources

• 2010 Federal Credit Card Accountability Responsibility and Disclosure Act
• It’s In the Cards (FTC blog)
• State by State chart
  
  Note: your best reference is your state Attorney General office.

Transcript:

Sponsor message This episode is sponsored by Mother Earth pillows. Mother Earth pillows are the original herbal flaxseed pillows handcrafted in Missouri. Made from golden flax with a little magic and a lot of love, they offer the highest quality products for self-care and for therapists. Available with and without scented herbal blends, Mother Earth pillows are made from food-grade golden flaxseed that hold heat and cold longer than similar products. With 100% cotton fabric and recyclable and reusable packaging, you can feel good about using Mother Earth pillows in your massage treatments and retailing to your clients. To get free shipping on your next order of over $50, use coupon code BLUEPRINT. Not to be used in combination with other coupons or on sale items. Visit massagebusinessblueprint.com/motherearth to learn more and order your Mother Earth pillows. That’s massagebusinessblueprint.com/motherearth.

Michael Reynolds Hey, everyone. Welcome to the Massage Business Blueprint podcast, where we discuss the business side of massage therapy. I’m Michael Reynolds. 

Allissa Haines And I am Allissa Haines.

MR We are your hosts. Welcome, welcome. Glad you’ve joined us today for this episode. How is the snow? Are you buried in two feet of snow, Allissa? You were mentioning the power was going out, snow was falling, snowmageddon. What’s the story?

AH Yeah. The other day, yeah, I had to actually miss office hours because we had lost power —

MR I know. You told me you bailed because your power went out. It was so funny.

AH It was ridiculous. I was in and out of our Transformational Journey course because I kept losing power and then I hot-spotted on my phone. But then I got stressed out worrying that my phone would die and that I’d use up all my data and I would have no power and it would be a nightmare. I had to do this thing where I actually sat by a bright window and read a book for three hours huddled — I had four —

MR Wow. Like the olden days.

AH Like the olden days. Only I was reading off of my Kindle, which, thankfully, was charged. Although I did have a paper book as back-up. I had like three layers of clothing on because we keep it pretty cool in my house. In winter, the temperature’s only set at like 66. So it was only 66 in here when it — when the power went out. So over that three hours it got down to 60 degrees, which I do not like the cold. I’m usually huddled under my electric blanket all winter, and so I was — I had on long underwear and two pairs of socks on and I was wrapped in my down comforter sitting in my chair reading my book, and I didn’t want to get up because it was cold out there. I was excessively relieved when the power came back on and also realized that I never would have made it in the olden days. I am not hardy. I was also kicking myself because I could have been over at Dr. Boyfriend’s doing the blizzard over there, and he’s got a fireplace and stuff. I kicked myself.

Right now, just so that you’re aware, right now we’re at the stage where pieces of frozen snow and such are falling from trees so — and they keep hitting my roof, right above me, and scaring the bejesus out of me. So that’s been happening all morning.

MR Nice. Well we’ll work —

AH So that could happen.

MR Well it worked out okay because during office hours we spent a half an hour doing questions about podcasting, so I was in heaven.

AH Nice. I’m not sad that I missed that. Michael, how are you? How is the Midwest? How is spring emerging there?

MR I’m doing great. Spring is trying to peek it’s head up and winter keeps smashing it back down, so we’re doing okay. I give it one more week until we get full on spring, so I’m happy about that.

AH All right. I believe in us. What do we got today? What’s our topic, Michael?

MR That’s a great question. I have actually forgotten. What is our topic today? [laughs]

AH [laughs] Our topic —

MR I’m thinking about spring now. Oh, I got it. I got it. You wanted to say it?

AH I’ll say it. It’s best practices for selling massage gift certificates.

MR Whoa. I had the wrong one. Good thing you did it.

AH Exciting days. Exciting days. And this came up, actually, in our Transformational Journey course yesterday. We had our money class, which is our final class of our, I don’t know, 14-week-something-class thing. That was a lot of non-descriptive words. It is the final section of our Transformational Journey course, and we had a great — we had a bunch of great questions come up about gift certificate sales, how to handle that money, and, more specifically, one of our participants asked, “Do you guys have a podcast on that?” and I was like, “No.” I’ve been dodging that bullet for what? Almost four years now? Three years now? I don’t know how long we’ve been doing this. I’ve been dodging that because it’s a mine field. But I’m ready to dive into the mine field today and hopefully not get things too wrong.

MR Sounds like a plan.

AH All right. Gift certificate sales. Woo wee. The first thing I want to note that there was some federal legislation passed in 2010 called the Credit Card Accountability, Responsibility and Disclosure Act, which regulates gift cards. And I had to do a lot of digging to even find what the definition of “gift cards” is because most of the information about these rules and legislations will say things like “gift cards” and “gift certificates,” but not really specify what they mean. So I had to dig really deep in to the law, Section 504 or 405 — I don’t remember anymore — to even define what this 2010 federal law is talking about. And it’s talking about retail gift cards — which can only be redeemed at specific retailers and the restaurants that sell them — and also bank gift cards — so things that carry a MasterCard logo or a Visa logo and those that can be used anywhere that particular MasterCard and Visa is accepted.

But, more specifically, it’s about electronic gift cards and gift certificates. Any type of gift certificate or gift card sale that had an electronic component. So this includes those actual plastic gift cards with the little stripey things on them, and it includes anything sold online. And this is really important. So if you sell gift certificates online, you — even if they’re not the little plastic gift cards, you need to comply with these rules. It’s defined by “electronic.” And these rules about electronic gift card sales are varied — and let me just pop in here with if you only sell paper gift certificates by hand in your office, you are exempt from this 2010 law. There’s going to be other laws to pay attention to and we’ll get to them. [Audio drops out] paper gift certificates and sell them by hand in your office in person, these portions of this federal 2010 credit card law do not apply to this. They don’t apply to paper stuff sold in your office, but the second you email that to somebody — if you email someone a PDF, this probably applies. And there’s — I say “probably” because I am not an attorney. You need to keep in mind these are not official legal opinions. And if you ask five attorneys if that PDF is considered electronic because you emailed it to somebody, they’ll probably have five different thoughts on it. So you got to make smart decisions and also consult someone in your state, but we’ll get to that. So this 2010 law that applies federally — so throughout every state in the nation — other states — states may have other laws which will supersede these, but the more strict law rules here.

So federal law in 2010 has all kinds of rules attached to it, which I will not go through in detail because there’s too many of them; it was like like 47 pages on this PDF. They restrict things like dormancy — if the card is inactive for a certain amount of time can there be inactivity fees? Can there be service fees? Once the card is used, can there be a monthly service fee until the card is used up in its entirety? Things like an expiration date. The federal law says these kinds of electronic cards need to have a minimum of a five-year expiration date. And, again, you might have state laws that supersede that; we’ll get there. But what about — ooh, I lost my train of thought because legal notes are hard. And let me go back [laughs] — we just had this conversation —

MR I’ll take your word for it. Legal notes sound like they’re really hard.

AH Legal notes are really, really hard and I want to get this — again, I want to get this as right as I possibly can, but I cannot get this completely right. And even if I was completely right, five other people who could also be completely right might have different opinions, and I’m not an attorney. I’m going to put the link to all of these — to the federal law and to a few articles from the FTC talking about the federal law and how it affects a small business. And I’m also going to put the link to the consumer information, because I found that reading through my consumer rights helped me understand my responsibilities and obligations as a business owner selling these things too. All of these links are going to be in the podcast notes, which you can get to at massagebusinessblueprint.com, go to the podcast tab, and look for episode number something that — Michael will tell us this episode number in a minute —

MR That’s a great question. That would be 148.

AH You look for episode 148, and I will have all of these links there for you. You can look at this yourself and that’s the shtick on electronic. You need to know that federally they’re regulated by this 2010 law. If you’re already selling gift certificates online through Square or through your gift — your scheduling system, it’s likely that you are already compliant, but you’re going to want to check with them. So you want to check with your scheduling system or — and make sure that it’s got everything you need. And it’s going to be compliant with the federal stuff.

But now we’re going to get tricky about some state-by-state stuff. So what about state-by-state laws? Your state-by-state laws might be much stricter than this federal law, and also your state-by-state laws are going to regulate old-style paper gift certificates as well as electronic sales. Their laws might vary. So in Massachusetts, where I am, I actually have to have all my gift certificates — they have to be valid for seven years, not five. And I have to have the — not just the expiration date printed or written somewhere on that paper gift certificate and also somewhere — be somewhere in the information for the gift card — has to be available for the plastic gift card users to access — I also have to have the date of purchase on there. So if I don’t have the purchase date and the expiration date on my gift certificate, then it’s valid forever. In Massachusetts, a certain percentage — once a certain percentage of a gift card is used, I have to offer the remaining balance back to that client in cash. So if someone buys a $90 — or a $100 gift card and they come in for a $90 service, I actually have to offer to give them that $10 back in cash or check or in some form of currency. This is all different state by state. There are states in which you turn over all of your unclaimed, un- — I can’t think of the word I’m looking for — it’s not reimburse — anyhow — any of your unclaimed certificates, unused gift certificate monies to be turned over to the state. [Audio drops out] file a complaint requesting a refund or use of that gift certificate after your business is closed.

It’s nutty. It’s nutty stuff. It’s very specific stuff. I’ve run away from covering this because it’s different state by state and, clearly, I cannot go through 50 states worth of rules. I can; however, tell you that in the podcast notes, I have a link to a spreadsheet about — that roughly lays out rules for each state. It’s the best spreadsheet I could find. It’s not ideal, but it’s the one that everyone on the internet refers to. I’m grabbing that right now in front of me to make sure I can see it because I was going to give you an example. Paymentlawadvisor.com has a decent spreadsheet on it. I read through mine briefly and looked at the few states around me and in Massachusetts, and I was surprised by a whole bunch of stuff. So before I jump into best practices and a little more information about law, Michael, who is our halftime sponsor today?

MR Once again we are giving a shout-out to the Center for Barefoot Massage.

AH Oh, that excites me. I love the Center for Barefoot Massage.

MR Yes, we do.

AH I’m happy that they are our sponsor

Sponsor message The Center for Barefoot Massage offers Ashiatsu continuing education classes across the country. They focus on a unique blend of anatomy-driven, game-changing, career-saving “FasciAshi” that will totally empower you to provide massage techniques with your feet. This is an alternative to wearing out your fingers and wrists and shoulders, and it’ll invigorate your career and enhance your quality of life because you won’t be breaking your body all the time to do deep and effective work. It starts with your foundation: your feet. Visit massagebusinessblueprint.com/barefoot to learn more and you will sign up to win a free day of training. That’s at massagebusinessblueprint.com/barefoot.

MR And I also want to add that we are getting a ton of interest in Ashiatsu lately. I’ve just seen a lot of people ask about it. How do I get trained? Is it cool to do, blah, blah blah? A lot of chatter about it, so it’s getting a little more attention these days, I think.

AH And you know, if you are on Instagram, you should totally go and find the Center for Barefoot massage account, and just search in your little explore screen “barefoot massage” or “Center for Barefoot Massage” and you’ll totally find it. I’m sorry I don’t have their little @ thing handy. They’ve got an amazing Instagram with lots of really great videos. You get a really good vibe if you’re interested at all in what barefoot massage is. So they’re totally my Instagram mentors. I think they do some really cool stuff.

14:36

Okay I’m going to take a sip of my coffee and then we’re going to dive into the second half. But this is intense stuff and I need more coffee.

MR I am on the edge of my seat.

AH It’s rockin’.

MR More legal notes, please.

AH More legal notes, please. See? This is what happens when our friend William requests a topic. I dive in to law.

MR Hashtag thanks, William.

AH [laughs] William of Jolly Buddha Massage. So best practices. The first best practice is know your state laws. If you didn’t grab that already, now you do. Who do you talk to in your state to find out more about your state laws? You’re going to talk to your attorney general’s office and/or your state treasurer department of revenue office. One or both of those offices, and probably specifically the attorney general, they are going to be able to tell you — even just on the consumer end, and that will lead you to more information on the business end — of what the rules are regarding gift cards and gift certificate sales in your state. Get friendly with them. Get friendly with your attorney general website. In Massachusetts, I found all of my information right on the website. I looked at a couple other states; I found it all right on the website. And it might be that your state has few or little or no laws about this. But you want to know if they do.

And the next best practice here is recordkeeping. And this is not rocket science; it’s recordkeeping. A spreadsheet, or even something written, that you keep in a fireproof box in your office — in your fireproof file cabinet so that it doesn’t get destroyed if something terrible happens to your office — because you’re going to want this. I say have it electronically somewhere where it is stored and backed up and such or available on the cloud. Really, really good recordkeeping. Every time you sell a gift certificate, especially if it’s in person and not done electronically so you have an electronic record, it needs to be recorded. You need to have that written down. The date of the sale, who you sold it to, who it was for — even though that information might change if it gets passed around a little bit — how much did you sell it for. You want to know if you sold it for someone for 60 bucks because there was some kind of a sale versus you sold it to somebody for a hundred bucks for its full face value because there was no sale. Was it sold for a particular service and what was the dollar amount of that service at the time you sold it, or was it sold for just a face value dollar amount? These are all bits of information you want and need should anyone have a question about it or should someone request a refund for some reason or another or should your business shut down and you need to provide a certain batch of information to your state. Or even if you just take a leave but you have an agreement with another massage therapist that they’re going to take your gift certificates. You want to know what you’re going to need to reimburse them if they do that for you. You want to have really, really good recordkeeping and, of course, you want to have place to make note so that when that gift certificate is redeemed — and redeemed is the word I was looking for earlier — you can make note of it there. Because you don’t ever want there to be a question of whether or not a gift certificate was redeemed.

You want to have a really good policy in place about if you will accept if someone loses a gift certificate. So if someone actually loses that paper gift certificate but you have a record of it, are you comfortable redeeming it even thought they don’t have that paper thing to hand you? If you have really good records, this is a no-brainer. You can totally accept things even though they can’t give them to you in your hand. Do you want to, though? That’s entirely up to you. So you want to have a good policy about how you’re going to handle redeeming. You want to know if a gift certificate- — what’s your policy on expired gift certificates? If there’s a gift certificate that is two months out of date, are you going to accept it anyway or are you going to be a hardnose about it and not. There’s no wrong answer here. There’s just what you choose to do within the guidelines of the federal and state laws. Okay. So that’s the recordkeeping portion.

So let’s talk about how you handle financials. And, again, some of this might be informed by state laws. Let’s say I run — let’s say I sell gift certificates before Christmas, and I make $500 in gift certificates. What am I going to do with that money? The super-wise, super-thoughtful, and forward-thinking massage practice owner is going to take that 500 bucks, move the portion of it to the percentage of it you’ll need to pay taxes for — or the tax percentage into your tax savings account. So let’s say you put 20% of all of your new money, every penny that comes into your business, you put 20% aside for taxes. So Michael, what’s 20% of $500?

MR Sorry. I was on mute. A hundred dollars.

AH I know you were. [laughs] So 20% of 500 bucks?

MR A hundred dollars.

AH There you go. Thank you. I actually knew that, but I wanted to involve you in this episode.

MR [laughs] I’m like, “Oh crap. She’s making me do math.”

AH I’m making him do math. So you want to immediately put $100 into your tax savings account so you can pay your quarterly taxes when that comes around. And then you want to take that 400 bucks that’s left, and you want to move it into a gift certificate savings account, and you want to not touch that until that gift certificate is redeemed. So if someone comes in and they pay for their $100 massage with their $100 gift certificate, at that point, you want to pay yourself for that massage, so you would move — what’s left there? — $80 from that gift certificate savings into your operating expenses account, into your “here’s how I pay myself and pay bills account.” Having that separate savings account specifically for gift certificates and for packages, if you sell packages, is totally — it’s stress relieving. Because once you start to sell gift certificates or packages, you will definitely have a week where half of your clients are all on gift certificates and packages. So you might give 20 massages and 10 of them were purchases with gift certificates and/or packages, so prepaid stuff. If you haven’t set that money aside, you’re not going to be able to pay yourself. You’re not going to be able to pay your bills. You are going to find yourself scrambling. It is very easy. And it’s the kind of thing many people accidentally do without realizing the ramifications in the first couple of years of their business ownership, where they’ll get that money and then they’ll spend it because they have the pressure of bills and such. But you are kicking your future self in the butt. You are stealing money from your future self when you do that.

So if you have not been in the past but are ready to move forward with really good money best practices for your gift certificates, you’ll start doing that. You’ll create a savings account just for gift certificates and/or packages, and when that money comes in, you’ll set aside that tax percentage and then put the remainder in your gift certificate and package savings account and then pay yourself when that gift certificate is redeemed. If you’re really good at recordkeeping, then once a year you’re going to be able to look at your past gift certificate sales; you’re going to know when those gift certificates and such expire. And once a year you can give yourself a bonus, and you can pay yourself out all of the money for any gift certificates that have expired in that year that are no longer redeemable. That’s a pretty nice bonus to give yourself annually, and it’s just great. It’s just awesome. And I know this because I finally went through all of my records, looked at how much money had expired in gift certificates over the past, whatever, 12 years. Because I did this last year, and I redeemed for myself out of my gift certificate savings a couple of years’ worth of expired gift certificates. And it wasn’t much because I wasn’t really good my first few years about putting money aside for gift certificates. But once I did that, it was nice to pay myself a couple hundred bucks. It was pretty sweet. I look forward to doing that again in a year.

The final best practice I have for gift certificate sales is just a repeat because it’s actually that important. Know your state laws. If you don’t know your state laws, if you have not been really mindful about setting the money aside because your state requires it or knowing exactly what needs to be on a gift certificate to make it all legal and kosher and allowed to expire and such, you should do that right now. Put it on your to do list for the next small block of time you have. Do a little online searching and maybe make a phone call to your attorney general or treasurer’s office and find out what your state laws are. Michael, I’m done. I hope this wasn’t too boring.

MR No —

AH Unmute.

MR [laughs] Yes. I was looking for the mute button. [laughs] Yes. No, I want to thank William, actually, for bringing this up because I love it when we dig into some of the meatier technical stuff that people have trouble figuring out. I did not find it boring. I found it kind of fascinating.

AH Oh, and I need to shout out to Rianne, because she pointed out in the past, I hadn’t really considered — I had considered taking tax money out of it because I take my tax percentage out of all the new money that comes into my business every week. But at the same time, I was actually taking the tax money out and then still transferring the full amount of the gift certificate into my savings, so I was actually putting more in my savings than I needed to. Which was not the worst thing, but I had a little glitch in my brain about the math and it was Rianne who pointed this out to me and helped me pull all that together so I could give better advice today. So shout-out to William. Shout-out to Rianne. Thank you. Sorry. Continue, Michael.

MR Nope. That’s all I got. Yeah. Thank you.

AH We’re done then. Wrap it up, baby.

MR Awesome. Let’s wrap it up. Well, thank you, everyone, as always for being with us today. Reminder our website is massagebusinessblueprint.com. You can find a lot of previous articles and podcasts there as well, as well as keep track of what’s coming up next. And we have a premium membership, which is growing every single day. Literally, I think, every week we get a new handful of premium members coming in, so we appreciate that.

AH Dude, we got three new premium members yesterday.

MR I saw that. Yeah.

AH It’s so exciting!

MR Yeah. So we’re really growing. It’s $9 a month, which is basically nothing for what you get. So I’ll just take a little moment to point out what you do get for that. Every month you get a new blog post template you can use as an article on your own website. So if you want to maintain a blog on your massage practice website and you don’t want to write for it, you can basically take our template that we produce for you and customize it and publish it and you’re good to go with no extra work. So that’s a great benefit. Stock photo images — I’m sorry, not stock photo — customized social media images. And then the best benefit, I think, is the premium Facebook group and the office hours. Office hours are a peer-to-peer consultation a few times a month via video conference and our premium Facebook community is the best out there. It’s the best massage therapy Facebook group in the world. I’ll just say it. Hands down.

AH It really is.

MR Definitively. So anyway, there’s that. If you have any questions or comments or topics for us, send it to us via email at podcast@massagebusinessblueprint.com. We will see you next time. Thanks, everyone.

AH Bye.