|Feds add gift card disclosure guidelines
|By Ellen Cannon
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
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 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