What do the new gift card rules mean for you?

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, March 24th, 2010

Starting August 22, 2010, consumers will have additional protections on bank-issued gift cards which are gift cards branded with Visa, MasterCard, AmEx, Discover, and retailer issued which are store gift cards (if your state doesn’t already provide strong retailer issued gift card protections):

What do these protections look like?

1. Funds (the gift card money) cannot expire for 5 years
Note that the plastic card itself may expire, but the money on the cards does not for 5 years.

You cannot be charged for replacing an expired card. Card issuers will be required to place the toll-free number or a website if they have one which you would contact to obtain a replacement to the expired card.

The card issuer cannot charge you a fee for replacing an expired card

The issuer can also choose to provide the remaining balance to the consumer instead of providing a replacement card.

2. No fees can be assessed until cards haven’t been used for one year

This fee can be assessed only once a month (This does not include one-time fees such as purchase fees, replacement card fees, etc)

Unfortunately, fee caps were not established, so use your card quickly.

3. Disclosures must be provided before purchase (fees, expiration dates)

This includes a disclosure under an expiration date on the card to tell you that the money may not have expired.

What remains the same?

1. Rebate cards are excluded

A loyalty, award or promotional gift card must state this on the card, along with the expiration date.

2. Prepaid reloadable debit cards are excluded

3. Consumers may still find themselves holding worthless gift cards if a retailer files for bankruptcy. Our petition to the FTC in 2008 to address the issue of gift cards and bankruptcy remains unanswered.

For more information on these gift card rules:

You can check out the blog on Consumer Reports.

Or, if you’d like to read the Final Rule from the Federal Reserve Board

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