July 20, 2010

US Federal Gift Card Disclosure Deadline Extended

HR 5502 amends federal gift card provisionsCongress passed the ECO-Gift CARD Act (H.R. 5502) on July 13, 2010 as part of the financial reform bill. President Obama signed the financial reform bill into law on July 21, 2010. What does this mean for consumers and retailers? The act would only extend the deadline for retailers to implement the gift card disclosure provisions specified in the CARD Act of 2009 from August 22, 2010 out to January 31, 2011. The main provisions of the federal gift card laws, covering expiration date and fees, are not impacted by the disclosure extension act. On August 22, 2010, gift cards sold to consumers must adhere to the core provisions specified in the CARD Act of 2009 even though the disclosure on the back of the gift card may not specify it. Some main provisions include:

  • Gift cards with expiration date must be at least 5 years from the date of last load, activation, or purchase.
  • No fees, such as ATM or dormancy, until one year of inactivity. If there is a fee, only one fee per month.

On the other hand, the extension will allow retailers to continue selling gift cards manufactured before April 1, 2010 even if the gift cards have incorrect disclosure on the back. Without the extensions, retailers would have to destroy tens of millions of already manufactured gift cards and order new cards in time for the holiday season. During the six month transition period from August to January, retailers must notify consumers of their new rights through signage, advertising, website, and customer service. Once January 31, 2010 comes around, retailers issuing gift cards must promptly display the gift cards term and condition. In addition, retailers:

  • Must provide a free replacement of old gift cards with new gift card or remaining balance.
  • Pre-disclose fees and expiration prior to purchase and cannot change disclosure after purchase.

The ECO-Gift CARD Act (H.R. 5502) act is a win win for both retailers and consumers. Retailers can continue to sell gift cards in their inventory, do not have to destroy gift cards, and do not have to waste money to order new gift cards printed with compliant disclosure until January 31, 2011. Consumers will still gain new protection for gift cards, such as longer expiration date and less fees, starting on August 22, 2010.

Feel free to leave a comment, if you have questions regarding the delay in the disclosure requirement for gift cards.

Gift card provisions amendments to CARD Act of 2009 [Govtrack.us]

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Comment now » | Posted by Alex | Filed under: Laws & Terms

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