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New Gift Card Law Limits Fees & Expiration

Gift cards make wonderful gifts because they allow you to basically choose what you would like for yourself. But have you ever turned to your gift cards from last Christmas, or two birthdays ago, only to find that the dollar amount has decreased due to fees, or that it has expired all together? Some of that unclaimed money [1] we see advertised on commercials and newspapers (which ends up being spent by your state) is actually made up of lost and expired gift card money [2].

Through the Credit Card Accountability, Responsibility and Disclosure Act [3], (effective August 22, 2010) Federal Reserve Regulations aim to close some of the loopholes that make this a $50 billion industry in favor of retailers/credit card companies and at the expense of consumers. Here’s the breakdown of the new regulations, referred to as the gift card law:

What The Gift Card Law Applies to

The new regulations impose restrictions on the following: gift certificates, store gift cards, and general-use prepaid cards.

Gift Card Expiration Dates

Under these new regulations, gift cards cannot be issued with an expiration date of less than 5 years from the date of purchase, or the date that funds were last loaded on a store gift card or general-use prepaid card.

Gift Card Fees

The target fees that restrictions are placed on are “inactivity fees,” “dormancy fees,” and “service fees,” all of which are defined under these new regulations. These fees are only allowed now if:

  1. There has been no activity with respect to the certificate or card in the 12-month period ending on the date on which the fee is imposed
  2. The certificate or card clearly and conspicuously states—(i) that such a fee may be imposed; (ii) the amount of such fee; (iii) how often such fee may be imposed and (iv) that such fee may be imposed for inactivity

It appears that the new gift card laws will certainly impact visa/mastercard gift cards, as some of them begin charging a monthly “service fee” within 1-3 months of purchase. And also this should impact some retailer gift cards which have a one-year expiration date. So good news for us consumers!

Of course, if you still don’t have a use for your gift card, you can sell it on Plastic Jungle [4]!