Feds add gift card disclosure guidelines
By Ellen Cannon • Bankrate.com

The Office of the Comptroller of the Currency, or OCC, has issued disclosure guidelines for national banks that issue gift cards so that consumers will understand what they are purchasing and using.

"It's very important that national banks engaged in this business adopt robust disclosure policies so that consumers understand what they are getting when they buy or receive a gift card," Comptroller of the Currency John Dugan says.

The OCC's guidelines are meant to cover a gift card that is "typically issued by a financial institution, carries the logo of a payment card network, such as Visa, MasterCard or American Express, and can be used at the various locations that accept cards from that network."

It does not cover retailers' gift cards, issued by retailers and good only in specific stores. However, retailers' cards tend to have fewer fees and restrictions, according to Bankrate's annual gift card survey. Retailers can make their profits off the merchandise purchased with the gift cards, but gift cards issued by banks have to rely on fees to turn a profit on their cards.

The guidelines call for specific information to be included on the gift cards.

Gift cards should carry the following information:

• The expiration date on the front of the card. • Fees for monthly maintenance, dormancy or usage. • A toll-free number or a Web site where consumers can get other information about their cards.

In addition, the OCC said that banks that issue gift cards should print a form or a brochure outlining other pertinent information to be given to the consumer when a gift card is issued.

This information should include:

• The name of the issuing bank. • Other fees that may apply to the gift card, such as replacement fees and foreign currency conversion, and how the fees will be charged. • Whether the card can be used in conjunction with another method of payment. • How consumers can make complaints about their cards. • Whether the issuer can change the terms of the gift card.

The gift card disclosure "is just guidance, not a rule," says Cindy Lasker, a spokeswoman at the OCC. "Institutions entering this business should know what is expected of them."

Ed Mierzwinski, consumer program director for U.S. Public Interest Research Group, or PIRG, doesn't think these guidelines will help curb unfair gift card practices. As he wrote in his blog, "Nothing in the OCC guidance requires these disclosures to be clear, to be large and conspicuous, or be in English and Spanish."

Many states have enacted, or are proposing, their own gift card consumer protection laws, but many of those laws do not apply to the national banks that issue gift cards.

The U.S. gift card market is expected to total $35.3 billion in 2005, according to Packaged Facts, a market research firm. In 2004, nearly two-thirds of American consumers bought gift cards.