Yesterday the Federal Reserve Board issued an interim final rule that postpones certain aspects of the gift card rules required under the Credit CARD Act to take effect on Aug. 22, 2010. The CARD Act requires that gift cards can't expire in less than five years since the last load of funds. It also limits certain fees. For example, an inactivity fee can't be charged unless the card hasn't been used in a year. The expiration date, fees and a toll-free number to get information have to be disclosed on the card itself.
The interim final rule from the Fed implements recently-passed legislation known as the ECO-Gift CARD Act. According to the Fed, "for gift certificates, store gift cards, and general-use prepaid cards produced prior to April 1, 2010, the legislation and interim final rule delay the Aug. 22, 2010, effective date of these disclosures until Jan. 31, 2011, provided that several conditions are met."
What does this mean?
Without the ECO-Gift CARD Act, the Network Branded Prepaid Card Association estimates that more than 100 million gift cards in existing stock would have to be destroyed because they do not have the required disclosures printed on them. The new legislation simply extends the deadline to produce cards that bear the disclosures. It doesn't delay the implementation of any of the consumer protections that take effect on Aug. 22.
"If somebody buys a card right now in the store that was produced before April 1, the card won't expire for five years, there will be no service fees until a year after inactivity," says Crystal Wright, a spokeswoman for the NBPCA. The disclosures required to be on the card will be communicated through such methods as in-store signage, customer service phone numbers and websites.
If new cards are produced on or after Aug. 22, they have to fully comply with the Credit CARD Act rules. Cards produced between April 1 and Aug. 22 cannot be sold. Gift card providers have until Jan. 31, 2011, to issue cards that have the new disclosures on them.
Do you think the new gift card protections are helpful?
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