In a little-noticed gift to the financial services industry, the U.S. Federal Reserve has delayed for about five months the implementation of new disclosure rules governing gift cards.
The new consumer protection disclosure rules, which were supposed to take effect Sunday, Aug. 23, will not take effect until Jan. 31, 2011.
Why? Good question. The Fed said the delay is to allow existing cards to be sold before the new rules take effect. Industry mouthpieces said consumers would still be protected but would not necessarily be notified of the new rules.
Got that?
If it makes sense to you, thank your Congressperson. If not, take note that the delay is the result of legislation passed by Congress that postpones the effective date of the new rules for cards that were produced before April 1. That supposedly allows merchants to sell their existing stock of gift cards -- and, even though the cards won't contain notices of the new rules, they'll be in effect anyway.
Or, in other words, ignorance of the law is -- for once -- inconsequential. In theory, anyway.
The changes are part of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD), which is being implemented in three stages. Provisions of the law already in effect include giving credit card holders the right to reject rate increases within 45 days and to pay off balances at current rates. Companies also must mail bills 21 days before due dates, up from 14 days previously.
New rules
So, whether disclosed or not, the new rules establish a standard gift card expiration date. Consumers will have five years, from the time of activation, to redeem gift cards.
Also included in the new rules is a provision that limits the fees businesses can deduct from gift cards: i.e.: inactivity fees, maintenance fees, etc.
Buying a gift card
The Wisconsin Department of Agriculture, Trade and Consumer Protection offers these tips for the wise use of gift cards:
• When youre buying a
card, ask about
expiration dates and
fees. This information
may appear on the card itself, on the
accompanying sleeve or
envelope, or on the
issuers website. If you
dont see it, ask. Make
sure that whatever the
salesperson tells you
also is in writing. If the
seller is reluctant to put
the terms or conditions
in writing or says it
isnt necessary shop
elsewhere. If the
information is separate
from the gift card, give it
to the recipient to help
protect the value of the
card. Its also a good
idea to give the recipient
the original receipt to
verify the cards
purchase in case it is
lost or stolen.
• Consider purchase fees:
Is there a fee to buy the
card, or activate it? If
you buy the card online
or on the phone, is there
a fee for shipping and
handling? Does
expedited delivery cost
more?
• Consider fees for the
recipient. It might be
embarrassing to give a
$50 gift card to someone
if much of the amount
gets gobbled up in fees.
• Check on purchase
exceptions. For
example, can the
recipient use a store-
specific gift card at either
the physical store or at
the stores website? Can
an all purpose card
really be used to buy
groceries or gasoline?
Using a gift card
If you've received a gift card, there are some tips from the Wisconsin consumer experts:
• If you didnt get the
cards terms and
conditions, the original
purchase receipt, or the
cards ID number, ask
for them from the person
who gave you the card,
and then keep them in a
safe place.
• Treat your card like
cash. If your card is lost
or stolen, report it to the
issuer immediately. You
may be out the entire
amount on the card.
Some issuers wont
replace the cards, but
others will if you pay a
fee. And if they do
charge for replacement
cards, youll most likely
need to document the
purchase and provide
the ID number. Most
issuers have toll-free
numbers to report lost or
stolen cards.
• If your card expires
before youve had a
chance to use it or
exhaust its value,
contact the issuer. They
may extend the date,
although they may
charge a fee to do that.
