Recent rules enacted by the Federal Reserve Board changed the regulations on gift card fees and expiration dates. The new rules went into effect for all cards sold after August 22, 2010 and serve to protect consumers from unexpected or hidden fees.
According to a recent survey by the National Retail Federation, gift cards will be the most requested gift for the 2010 holiday season. Rather buying or receiving a gift card, it is important for you to grasp these new rules to avoid any holiday disappointments.
Longer Expiration Dates on Balances: Under the new regulations, the balance on a gift card cannot expire before five years after it is issued. Therefore, the balance cannot expire, but the actual plastic card can expire. Bank issued gift cards are more likely than retail cards to have an expiration date for the physical card.
Increased Disclosure to Consumers: The new changes require consumers to be aware of all fees and limitations before purchasing a gift card. These should be printed on the packaging of the gift card and include the amount each fee will be and how frequently they will be made.
One Year of Inactivity Fees: Companies can charge a fee, if gift cards are unused after a one-year grace period. After that grace period, one fee can be charged per month and these fees are required to be clearly disclosed to the consumer before buying the card.
The changes apply to gift certificates, single-store cards and the Visa/MasterCard/Amex general-use gift cards which can be used at any store. Prepaid phone cards and reloadable cards not marketed as gift card and reward cards are exempt from these new regulations.
BBB Consumer Advice:
- Check the terms and conditions of the gift card.
- Be sure to keep track of expiration dates and contact the store if your plastic card needs to be replaced soon.
- Keep in mind that there is no maximum when it comes to monthly fees. A company could charge a very high amount after a year of inactivity as long as they disclose it. For example, Chase charges a $2.50 monthly fee after the first 12 calendar months following the gift card's purchase.
- If you are giving a gift card to someone who will make all their purchases online, be sure the gift card is redeemable for Internet shopping and not just for in-store use.
- Can the card be replaced if lost or stolen? What information do you need to know if so and is there a fee for replacing a lost card?
- Try to use the full balance as soon as possible to ensure you're getting your money's worth.