Consumers are getting more value out of their gift cards, thanks in large part to federal legislation enacted several years ago. But gift cards still lack the kind of fraud protection that comes with credit and debit cards, according to a recent report from CEB TowerGroup.

This year, gift cards lost 1.6 percent of their total value to fees or expiration. That’s less than the 2 percent drop in value last year and a whopping 10 percent drop in 2006 when the group first studied the gift card industry. The research and data analysis company released the study to its members in early November and provided a copy to Bankrate on Tuesday.

The reason for the decline is the Credit Card Accountability, Responsibility and Disclosure Act of 2009, says Brian Riley, senior research director for CEB TowerGroup’s retail banking and cards unit. The act limited fees that gift card issuers could charge, and it required that gift card funds stay good for at least five years. That radically reduced the amount of money that consumers lost, he says.

“Gift card risk, in terms of lost value or not getting your full dollars’ worth, is very much under control,” Riley says. “We don’t expect that number to get to zero, because there are some legitimate fees issuers can charge.”

For example, a gift card issuer can charge a monthly maintenance or dormancy fee if the card hasn’t been used in 12 months or more. A recent Bankrate survey of 63 gift cards found that store-branded cards typically didn’t charge these dormancy fees. However, six of the eight general-purpose gift cards did.

CEB TowerGroup’s report also noted that gift card issuers don’t adequately protect consumers from stolen cards or fraud. It suggested that this may be an area the Consumer Financial Protection Bureau, the government’s consumer watchdog, could address in the future.

Two-thirds of gift card issuers that Bankrate surveyed will replace a gift card or its funds if it’s lost or stolen. Some require consumers to register the card first or provide the card number before replacing it. Others will charge a fee — as much as $15 — for a replacement.

“It shouldn’t be the consumer who is stuck in the middle of this,” Riley says.

CEB TowerGroup expects sales of gift cards to total $110 billion this year, up from $100 billion last year. General-purpose cards will account for $40 billion of the total, while restaurant, retailer and other brand-specific gift cards will add another $67 billion. E-gift cards will bring in $3 billion.

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