If you are anything like me, while cleaning out your junk drawer this spring you will probably find numerous unused gift cards, given to you by various friends and family members last Christmas, or even on your birthday two years ago. For me, the initial excitement of getting a gift card or gift certificate quickly leaves the mind once that gift card is stuffed into a drawer. And if, like me, you often find those cards exactly one day after they “expire,” a new federal law may offer you (and me) some hope.
Your credit card company may have recently sent you new disclosures prompted by the Credit Card Accountability, Responsibility and Disclosure Act (the “Credit CARD Act”). What you may not know is that, as of August 22, 2010, the Credit CARD Act will have significant effect on the expiration of your long-lost gift cards. For the most part, the Credit CARD Act creates a minimum 5-year expiration-date requirement for gift cards sold for valuable consideration (or 5 years after funds were loaded onto the card). All rules regarding expiration must be conspicuously placed on the card and must be disclosed by the issuer prior to purchase.
Another potentially helpful aspect of the new rules is the regulation of those pesky dormancy, inactivity, and service fees. The rules will prohibit the imposition of such fees unless 3 conditions are met: (1) there must have been no activity on the card for one year prior to the imposition of the fee; (2) only one fee may be assessed per month; and (3) fee requirements must be “clearly and conspicuously stated” and disclosed prior to purchase.
A word of warning: the rules explicitly do not apply to cards issued in accordance with a loyalty, award, or promotional program, nor to reloadable cards that are not intended to be gift cards or gift certificates. Suppliers of such cards would, however, have to comply with new, stricter disclosure requirements.
It is also worth noting that the federal rules follow on the heels of various state laws, which have implemented similar rules in the past. For instance, Ohio Revised Code 1349.61 already requires a 2-year expiration for cards sold in Ohio. The new federal rules will provide nationwide uniformity for treatment of gift cards and gift certificates, which were mostly previously regulated under various state statutes.
Hopefully these new rules will only act to benefit those that lose gift cards, only to find them a year later, on the verge of expiration, or worse, already expired. The implementation of these rules will help those of us whohave shoved those gift cards into the junk drawer assuring ourselves that we will not forget, and with any luck, finding an “old” gift card may start to feel more like finding a stack of cash, and less like finding, well, an expired and unusable gift card.
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