Don't let a retailer tell you your dusty old gift card has expired. Here's how you can fight back.

CHANCES ARE, Santa left you or someone you love a gift card under the Christmas tree last month.

These snazzy, updated versions of old-fashioned gift certificates are all the rage these days. Retailers sold an estimated $17 billion worth of them during the past holiday season, according to the National Retail Federation, 8% of all sales. Some 70% of all shoppers bought at least one last year.

But while the technology is improving, one inherent problem remains: Many of us will never have the opportunity to redeem our gift cards for their full value.

Why? Like it or not, many Americans are forgetful, or careless, or both. Roughly 5% of last year's gift cards will never be redeemed, says Comdata, a leading provider for gift cards. Many consumers lose their cards or shove them in drawers until long after they expire. Once that happens, the people who try to redeem are rejected flatly or are greeted with the unhappy news that the retailer has slowly been chipping away at that card's value with a monthly service fee that can be as high as $2.50. (Click here for Senator Charles Schumer's latest survey on dormancy and service fees.) Indeed, up to 10% of the value on cards that are redeemed will never be used, according to the State of Illinois. Maybe a card stuffed with cash isn't so tacky after all.

But don't despair. Redeeming an old gift card isn't impossible, no matter when you decide to hit the mall. You simply need to know your rights and how to navigate your way through some red tape. Sure, you may need to be willing to create a public scene. But think of it this way: It's an opportunity to channel your inner drama queen in a productive direction.

The Retailers
First off, some good news: Retailers are finally getting the message that expiration dates and monthly service fees are bad for business. Not only do they alienate customers, but they're also a huge missed opportunity. "When a card is used in a redemption transaction, the average order value is 31% higher than the merchant's average order," says Michael Zanoni, vice president of sales and marketing for Datamark Technologies, a Princeton, N.J.-based marketing firm that specializes in stored value cards.

This helps explain why companies like Borders Group (BGP) and Sears (S) no longer have expiration dates on their gift cards, and why Starbucks (SBUX) no longer charges its customers those nasty dormancy fees. If you've got gift cards from these chains, you're golden.

And some retailers are so eager to get customers to use their gift cards that they'll even call customers to remind them that they have money left on their old cards.

State Laws
Who says your state government doesn't care about you? Thanks to the growing popularity of gift cards, individual states are finally stepping in and regulating them. So far, 10 states have laws on their books that extend expiration dates on gift cards and paper gift certificates well past the traditional one-year mark. Indeed, in California, Connecticut and Maine, they never expire, and in Massachusetts they can be redeemed for up to seven years. Some of these states also have restrictions on dormancy and service fees.

At least eight states, including Maryland, Illinois and Utah, have pending legislation to restrict the use of expiration dates or dormancy fees, or both. "This is the wave of the future," says George Delta, a lawyer with Vienna, Va.-based law firm Gary & Goodman. This phenomenon, he explains, is at least partly driven by consumer advocates who rightly believe that gift certificates are like cash.

Then there's a rather obscure unclaimed-property law, more formally called the escheat law. Some 39 states have some type of escheatment law on their books that dictates that a retailer hand over the value of a gift card to the treasurer if the value isn't redeemed by the customer within a certain amount of time. While this varies from state to state, it tends to be between three and five years.

Once this money goes to the state, consumers can file a claim to have the property returned. (More on this later.) We will warn you that making a claim can be quite a hassle. But it has one very positive side effect: It sends a message to the retailer that the value of a gift card, even if expired, is never relinquished to the store. It either belongs to the customer or the state. So if your gift card expires, for example, after one year but doesn't escheat to the state for another two years, there's no reason for the merchant not to honor your card.

"(Many retailers) are under the misguided counsel that if you set an expiration date prior to when it (escheats to the state) that they get to keep it," Datamark Technologies' Zanoni says. Why not just honor the gift card in the first place?

Tapping the Value
Before you hit the mall, educate yourself. Since there are no national laws regulating gift cards and paper certificates, you need to find out how your state deals with them. The easiest way to figure this out is to go online and check with your State Attorney General's Web site.

If you have a card that has expired and you don't live in a state like California that protects you, try asking the manager to honor the gift certificate anyway. You'd be surprised how often a manager will say yes, particularly once you start to put up a fight.

If you don't get anywhere with the manager, call or write the company's headquarters. Marcy Manning, a publicist from Lincolnshire, Ill., had great luck with this approach. When she went to use her Linens 'N Things (LIN) gift card a couple of months ago, she was told that it had expired two years earlier. Refusing to walk away from the money, the store manager put her on the phone with a representative from the bedding store's headquarters. Two weeks later she had a new gift card waiting for her in her mailbox.

As we mentioned earlier, when all else fails, you can file a claim with your state comptroller's office. Many Web sites will even have a page dedicated to "unclaimed property," says Deborah Thoren-Peden, an attorney with Pillsbury Winthrop, a N.Y.-based law firm. Normally, the gift card belongs to the person who received it, she says. But if the retailer doesn't have that person's address, the card will escheat to the state in which it was bought. In that case, the gift giver will need to make the claim. Only a handful of states, including Florida, don't force retailers to escheat the property over to the state. For a list of state escheat laws, click here.

The Art of Gift Buying
To avoid any confusion, your best bet is to avoid buying a gift card with an expiration date or monthly dormancy fees. And while we love the idea of supporting small merchants, Gary & Goodman's Delta warns that mom and pop retailers are more likely to uphold strict expiration dates in states where there are no explicit laws regulating them. The reasoning? It's very easy for a small shop or restaurant to fly under a state's regulator's radar.

Of course, the easiest way to avoid any of these problems is to use your holiday gift cards right away. Major retailers even allow you to use them to make online purchases. Here's another suggestion: If you get one from a store you don't like, consider selling it online or swapping it for another at Web sites like Certificateswap.org or eBay.