From the Federal Trade Commission website:
New rules for gift cards went into effect on August 22, 2010. Here are the highlights:
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.
Also:
retail gift cards are sold by retailers and restaurants, and can be used only with those merchants.
bank gift cards carry the logo of a payment card network like American Express, Discover, MasterCard or Visa, and can be used wherever the brand is accepted.
There are other issues to consider. Go to their page to read more:
http://www.consumer.ftc.gov/articles/0182-gift-cards
And yes, we use store gift cards a lot. Like the Kroger gift cards, it used to be if you use a WalMart or Sams Club gift card you get a further savings when buying gas from those outlets. I have to see if that is still the case. When ordering items on-line you can sometimes use a Visa/Mastercard/AmericanExpress gift card to limit your liability. Some places won't let you do that, which makes me immediately suspicious and I reconsider ordering from those places.
With college students, we'll buy them a prepaid bank card then load it with their allowance monthly. Again, this limits our liability and is convenient for them. It is safer then sending them checks, too.