12/01/2010

Credit CARD Act of 2009 Affects Gift Cards, Too

The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD act) went into full effect August 22, 2010. This legislation brought new regulation to the credit card industry (many of us saw our credit card interest rates jump in response). Deeper in the bill also came new regulations for gift cards.
For those of you who support gift card programs, below is a brief list of key changes. The full text of the legislation can be found here.

Expiration Date:
Cards cannot expire within five years from date of purchase (or within five years after the most recent addition of funds).

There also can be no fees to issue replacement cards (or a balance refund) for any expired card that still carries value.

Fees:
Fees have been substantially limited. Dormancy, inactivity, and service fees are now unlawful, unless
• The card has been wholly inactive for 12 months
• All fees were “clearly disclosed” on the packaging (cards issued before April 1, 2010, have until January 31, 2011, to achieve disclosure compliance)
• No more than one fee is charged per month

Affected fees may include monthly maintenance or service fees, balance inquiry fees, and transaction-based fees, such as reload fees, ATM fees, and point-of-sale fees.

State Laws:
In states with stronger laws, those state laws will remain valid (including a multi-state ban on gift card expiration dates).