New Gift Card Rules

Some small, mid sized and regional retailers who still set fees and expiration dates on gift cards could be affected by new card rules in August, 2010. That’s because The Federal Reserve is refusing to give retailers extra time to comply with new restrictions on gift card expiration dates, fees and disclosures, saying the rules will go into effect this summer as planned. According to the National Retail Federation (NRF), the Fed recently issued a final version of the rules, implementing restrictions mandated under the Credit Card Act, signed into law last year.

Beginning August 22, gift cards will not be allowed to expire any sooner than five years after they are issued, and dormancy fees will not be able to take effect less than a year after a card is issued. Any expiration dates or dormancy fees must be disclosed to customers before purchase.

NRF asked the Fed for a six month delay in a requirement that expiration dates and dormancy fees be printed on the cards, saying retailers could honor the restrictions on dates and fees by August, but needed more time to get old cards without the proper disclosures printed on them off the shelves. In the final regulations, the Fed declined. “People will be scrambling to make sure every single card is off of every single shelf,” NRF VP and Government Relations Counsel, Elizabeth Oesterle, said. “A lot of retailers don’t have expiration dates or dormancy fees, but for those that do, they will have to go back and check carefully to make sure on August 22 those cards are off shelves.”

The deadline could become even tighter if Senator Charles Schumer, D-NY, gets his way. Schumer told Women’s Wear Daily he plans to work with the Fed, “To speed up the effective date, rather than keep consumers at risk of being ripped off until next summer.” Schumer did not specify a date. The Fed did acknowledge NRF’s concern that there might not be enough room to print disclosures on the cards, and revised the regulations to allow variations in type size and placement of disclosures, “So long as the disclosures are clear and conspicuous.”

Most major national retailers have already eliminated expiration dates and dormancy fees, both to comply with a wide range of restrictions adopted by more than 40 states, and for customer service reasons. That means the new rules will impact mostly bank issued gift cards, usually sold under credit card brand names, or as “mall” cards, which typically carry the quick expiration dates and high fees that led to calls for legislation. For more information, contact the National Retail Federation at