The Federal Reserve announced today proposed rules that would restrict the fees and expiration dates that are normally applied to gift cards.
But the Fed is not exactly full of the Christmas spirit. The rules won’t take effect until February of next year, missing out on the 2009 Christmas shopping season.
The rules would also require that gift card terms and conditions be clearly stated. And that expiration dates on gift cards be set at least five years from the date of issuance, or five years after the date when funds were last loaded.
The Fed’s new rules would prohibit “dormancy, inactivity and service fees” on gift cards unless:
- There has been at least one year of inactivity on the certificate or card;
- No more than one such fee is charged per month; and
- The consumer is given clear and conspicuous disclosures about the fees.
Many gift card issuers now charge fees to those who receive gift cards and haven’t used them for an extended period of time. They do so by deducting funds from the cards.
The new rules are part the batch of credit card reform laws, the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act), which takes full effect in February. As is customary with Fed proposed rules, interested consumers and companies can comment on the proposal for 30 days.
Covered gift card products include retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.
To submit comments on this proposal to the Federal Reserve, take note of “Docket No. R-1377″ and click here.
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