New Gift Card Rules Go Into Effect

  • Aug 24, 2010

Outlined in legislation passed by Congress last year, new consumer-friendly gift card regulations took effect on Sunday. The rules, passed as part of the Credit Card Accountability Responsibility and Disclosure Act of 2009, are designed to limit burdensome fees and unfair practices by card issuers.

For example, under the new regulations, an inactivity fee cannot be charged until a gift card has been unused for a full year. Also, cards cannot expire for at least five years and issuers can only charge one fee to a cardholder in a single month, instead of multiple penalties. The legislation has also attempted to limit hidden restrictions, meaning cards must now be printed with rules for fees and expiration dates, along with a toll-free telephone number or website where a consumer can find more information.

There are exemptions to the regulations, however. The new rules do not apply to reloadable cards, such as prepaid phone cards or rechargeable debit cards, or rebate and loyalty-reward cards. In addition, gift cards produced before April 1, 2010 are exempt from new disclosure requirements until January 31, 2011. During the 2009 holiday shopping season, consumers spent $26 billion on gift cards, according to the National Retail Federation. Gift card sales annually reach about $100 billion, but research shows $5 billion of that money is never used.

  • Category: Incentive Programs
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