If your business offers gift certificates or prepaid gift cards you need to be aware of a new law affecting those cards. In March 2009, the Credit Card Accountability Responsibility and Disclosure Act of 2009 was enacted setting out certain restrictions on gift certificates, store gift cards and general-use prepaid-cards. That law requires the Federal Reserve to implement related rules and regulations. The Act and the rules and regulations go into effect August 22, 2010.
This new law and associated rules restricts the ability to charge fees, namely dormancy, inactivity or service fees. It also prohibits the sale of prepaid products with an expiration date of less than five years and imposes additional disclosure requirements. The rules apply to gift certificates, store gift cards, and general-use prepaid cards sold to consumers; specifically, those that are sold largely for personal, family, or household purposes. As always, exceptions are noted, such as certain products issued in connection with a loyalty, award, or promotional program, or that are reloadable and not marketed or labeled as a gift card or gift certificate.
Since many of your businesses may offer prepaid gift cards through a third-party provider or card sponsor, we recommend that you speak to your provider and discuss the steps they are taking to comply with the regulations so there is no delay once August 22, 2010 rolls around.
For more information contact contact us.