Act delays disclosure requirements on gift cards

Tobie Blanchard, Tucker, Jeanette A.  |  1/4/2011 1:12:16 AM

News Release Distributed 12/01/10

Americans will spend a projected $23 billion on gift cards this holiday season. Consumers gained new gift card protections when most provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 took effect. But legislation known as the ECO-Gift CARD Act delayed one part of the law.

LSU AgCenter family economist Jeanette Tucker says new information regarding inactivity fees and expiration dates won’t be required to be printed on gift cards until after the holidays.

“The ECO-Gift CARD Act prevents the destruction of more than 100 million gift cards that didn’t have the required disclosures printed on them,” Tucker said.

The disclosure requirements of the CARD Act will go into effect on Jan. 31, 2011. Gift cards without the disclosures can still be sold through January, but card issuers still must apply the CARD Act benefits. Newly minted CARD Act-compliant gift cards will have the required information printed on them.

During the holiday shopping season, “consumers can expect to see a combination of old and new cards in stores,” Tucker said.

Other gift card provisions of the CARD Act include:

– Gift cards can no longer incur inactivity or dormancy fees until after a year of non-use.

– Funds loaded onto gift cards have to be available for at least five years after the date the card is purchased or is last loaded with funds, whichever is later.

– Consumers can request a free replacement card if the card expires, but the funds remain valid.

The CARD Act applies to "closed-loop" gift cards, which can be used at a single retailer or a chain of stores or restaurants, and "open-loop" cards, which bear a credit card logo such as American Express or Visa and can be used at any merchant that accepts the card brand.

Little will change for retailer gift cards because closed-loop cards do not generally have fees or expiration dates. That means you will likely see few disclosures for store gift cards, Tucker said. Inactivity fees and expiration dates are more prevalent with open-loop cards.

“Five out of eight major network-branded gift cards charge an inactivity fee,” Tucker pointed out.

Don't expect to see CARD Act signs at gift card kiosks everywhere. The ECO-Gift CARD Act didn't pass until a month before the gift card rules were slated to take effect; therefore, some new card stock had already been produced in preparation for the holiday season.

After Jan. 31, 2011, gift cards on store shelves must have the required disclosures printed on them.

Tobie Blanchard

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