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New Gift Card Rules Aimed to Help Consumer

Posted: August 24, 2010

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The companies that sell gift cards support the new rules. “It’s a great thing,” says Crystal Wright, a spokesperson for the Network Branded Prepaid Card Association. “We think the rules are a win-win for everybody.” (Note: The new rules do not cover reloadable cards, such as prepaid phone cards or rechargeable debit cards from the big credit card companies. Rebate and loyalty reward cards are also exempt.)

Still room for confusion

Disclosure is an important aspect of the new gift card rules. They require gift cards to list all fees and any expiration date on the card. But not all gift cards will have this information right away. Congress recently passed a law – requested by the industry – that exempts gift cards produced before April 1, 2010, from these new disclosure requirements until January 31, 2011. Under the exemption, card-issuers must use alternate ways to alert buyers and recipients about their terms and fees. This can be done through in-store signs, messages displayed on websites and provided during customer service calls, as well as general advertising.

The industry says the delay will prevent the needless destruction of more than 100 million plastic cards produced earlier this year. Consumer groups see this as a needless loophole that creates customer confusion. “They can still sell a card that does not tell you the whole truth about your rights through this holiday season,” says Gail Hillebrand, a lawyer with Consumers Union (publisher of Consumer Reports). “Just remember, you have the same rights whether or not they’re printed on the gift card.”

Happier holidays

For years, consumer groups have criticized gift cards because of inactivity fees and short expiration dates. Now those nasty “gotchas” have been reduced. But there still can be a one-time transaction fee when you buy the card. And that fee can vary from card to card. So be sure to check.

Something else you need to know. Under the new gift card rules the physical card can have an expiration date, but not your money. So if your card expires and there’s still money left on it, call the card company and ask them to send you a new one. They must do this for free or return the remaining balance.