By David S. Almeida, firstname.lastname@example.org
As a previous Chain Store Age guest commentary from May 7, 2010 outlined (available here), the Federal Reserve Board recently issued new federal regulations governing the provision of retail gift cards.
Specifically, the new rules amend Regulation E of The Electronic Fund Transfer Act, 15 U.S.C. § 1693, et seq., which, in conjunction with the recently promulgated Credit Card Accountability and Responsibility Disclosure Act of 2009 (the “CARD Act”), requires greater transparency for retailers seeking to impose fees (such as dormancy fees for non-use) and/or expiration dates on users of gift cards. The new Rules, originally slated to take effect on August 22, 2010, apply to both retail cards sold for store credit and cards issued through loyalty or other reward programs.
On July 27, 2010, the ECO-Gift CARD Act became public law after the House passed it unanimously on June 14, 2010, and the Senate passed it by unanimous consent on July 13, 2010. The ECO-Gift CARD Act extends the gift card implementation deadline under the CARD Act from August 22 to January 31, 2011. This extension allows retailers to sell existing gift cards that were produced prior to April 1, 2010, and ensures consumer access to them during the busy holiday shopping season. The Network Branded Prepaid Card Association had sought the delay, arguing that the Rules’ requirements regarding the display of expiration dates would result in more than a hundred million gift cards having to being scrapped.
The extension of the effective date for the Rules is conditioned upon the requirement that gift certificate and card issuers comply with the dormancy, inactivity and service fee restrictions set forth in the CARD Act. Consumers who purchase old gift card stock currently in stores during this transition period must still receive the full benefits of the new Rules, including: