June 14, 2010

Federal Gift Card Law Explained in Simple Terms

National gift certificate regulationOn May 22, 2009, the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 was signed into law with a provision that amends the Electronic Funds Transfer Act with federal regulations governing gift card fees, expiration date, and relations to state laws. One year later, consumers are still confused about what protections and rights are provided by the new law. The biggest confusion pertains to when the federal gift card provisions goes into effect. FYI, the federal gift card regulation takes effect on August 22, 2010 or fifteen months from when the law was passed. Here are answers to other common questions that we have received since the law was passed.

Does this new law apply to my Visa gift card? If not, which gift cards are covered?
The law spells out in great detail that pre-paid cards, gift certificates, and gift cards publicly marketed as such products are covered by the new federal law. The only exceptions are cards that are:

  1. used solely for telephone services.
  2. reloadable and not marketed or labeled as a gift card or gift certificate.
  3. not marketed to the general public.
  4. a loyalty and other promotional award.
  5. issued in paper form only, redeemable for:
    • admission to an event or for the purchase of goods or services in conjunction with the admission, i.e. concert tickets.
    • specific good or service, or “experience,” such as a spa treatment, hotel stay, or airline flight, i.e. vouchers.
    • a certain percentage off the purchase of a good or service, i.e. coupons.

Therefore, if the Visa gift card was sold on or after August 22, 2010 and marketed as a gift card, such as if the words “gift card” appear on the card, then most likely it is covered by the new federal gift card provisions.

I thought gift cards no longer can expire, how come my gift card expired on me?
Gift cards sold on or after August 22, 2010 can still have expiration dates. However, the main change is that expiration date must be at least five years from the date of issue or date of last load. Gift cards, pre-paid cards, and gift certificates with expiration date less than five cannot be sold.

I live in California, does the new federal law override the protection provided by my state’s law?
The federal gift card law does not preempt state laws governing gift card fees and expiration date if the state law provides greater consumer protection. For example, retail store gift cards sold in California cannot have expiration date, which is greater consumer protection than the minimum five year expiration date allowed under federal gift card laws. However, gift cards issued by banks, such as American Express gift cards, are not covered by California’s gift card laws and can have expiration dates that are at least five years from the date of issuance.

Feel free to leave a comment, if you have questions regarding the new federal gift card provisions to take effect on August 22, 2010.

Credit Card Accountability Responsibility and Disclosure Act of 2009 [Govtrack.us]
Final Rule on Gift Card Amendment to Electronic Transfer Act [Federal Reserves]

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