Watch out for rebate card fees


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

By Consumers Union on Tuesday, January 12th, 2010

Have you gotten a rebate from any shopping you’ve done lately? Chances are it came in the form of a rebate card rather than a check. Rebate cards are becoming increasingly popular with retailers, but they can come with fees and other restrictions that can quickly eat up your rebate savings.

Rebate cards look just like gift cards but they aren’t covered by the same state laws and a new federal law that limit fees and quick expiration dates on gift cards.

Rebate cards are just like other prepaid cards that can come loaded with fees, including fees for activating the card, checking balances, inactivity, going over the limit, or replacing a lost or stolen card. Some rebate cards expire in as little as three months. By contrast, the Credit CARD Act of 2009 prohibits gift cards from expiring before five years from the date of purchase. Gift card issuers are barred from charging fees for the first 12 months. These new federal gift card protections will go into effect in August.

We first learned about the problems associated with rebate cards when we heard from consumers like Shirl from Ohio and Allison from Chicago:

Shirl – Ohio:

“I don’t want any more rebate cards. I couldn’t find out the balance, but for sure fees ate up some
of my rebate. And it threatened to eat up some more if I didn’t use it at once, as there was a monthly charge.”

Allison – Chicago:

“I was given 2 AT+T cards as a rebate each $50.00. I tried to use them at several stores and they would not go through. By the time I went through red tape at AT+T the cards expired and they would not make them good although the process was started before expiration.”

Rebate cards are a perfect example of why we need a Consumer Financial Protection Agency so government regulators can respond more quickly and effectively to problems created by new financial products.

Got a rebate card story? If so, tell us about it in the comments.

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