WASHINGTON (3/25/10)—Final rules to restrict the fees and expiration dates that may apply to gift cards, and to require that gift-card terms and conditions be clearly stated, become effective Aug. 22, according a Federal Reserve Board announcement. The rules, which implement the gift-card provisions if the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, are issued under the Fed’s Regulation E. They share their Aug. 22 effective date with other CARD Act rules, those recently proposed under Regulation Z that address penalty fees and the process to review rate increases every six months. These are the final two sets of rules expected to implement the CARD Act. The Fed’s CARD Act rules apply to credit unions and all other financial institutions. The final gift-card rules prohibit dormancy, inactivity, and service fees on gift cards unless:
* The consumer has not used the certificate or card for at least one year; * No more than one such fee is charged per month; and * The consumer is given clear and conspicuous disclosures about the fees.
An expiration date for funds underlying gift cards must be at least five years after the date the card was issued, or five years after the last date the card was re-loaded. The rules cover network-branded gift cards, which are redeemable at any merchant that accepts the card brand , as well as retail gift cards that can be used to buy goods or services at a single merchant or affiliated group of merchants. Use the resource links for more information.