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New Credit Card Act affects Gift Certificates too. YOU NEED TO KNOW THIS

According to an article I just read, part of the CARD act is written toward gift cards and Gift Certificates. Gone are the days of the One Year Expiration Date! Starting in August, you will be required to honor them for up to 5 years. I haven't read the Act directly so this comes from an article from a consumer law firm:

The Credit CARD Act will impose requirements on gift certificates, store gift cards, and general-use prepaid cards, each of which the legislation defines. The new law places restrictions on “inactivity
fees,” “dormancy fees,” and “service fees,” as several state laws
already do. Such fees will only be permitted where: (1) there has been
no activity with respect to the certificate or card in the 12-month
period ending on the date on which the fee is imposed; (2) the
certificate or card clearly and conspicuously states—(i) that such a fee
may be imposed; (ii) the amount of such fee; (iii) how often such fee
may be imposed; and (iv) that such fee may be imposed for inactivity.
Also, not more than one fee may be charged to the consumer during any
one-month period. Issuers or vendors of gift certificates or cards must
inform consumers of any fees before the consumer purchases the card.
Gift certificates and cards that are distributed as part of award,
loyalty or promotional programs for which no money or other value is
exchanged are exempt from the new law.

The new law also places restrictions on expiration dates, another common feature of state gift card laws. It will prohibit the sale of gift certificates or cards that have an expiration date which is less
than five years after the date it was issued, or the date that funds
were last loaded on a store gift card or general-use prepaid card. A
certificate or card carrying an expiration date must clearly and
conspicuously disclose the expiration date.

How will this influence your policies on gift certificates?

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Replies to This Discussion

Permalink Reply by Lisa on April 5, 2010 at 9:52am

i actually thought it was a state to state thing regarding gift certificate expiration dates and thought that some states (including TX) had a regulation that you could not impose any expiration date.

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Permalink Reply by Susan G. Salvo on April 5, 2010 at 1:28pm

Yes, any business that issues gift cards or certificates must clearly indicate the time frame in which prepaid services can be redeemed. This includes expiration dates on gift certificates. As of November 1, 2008, the federal government requires all business that sell gift cards or certificates to have an expiration date of no sooner than 5 years from the date the card is issued.

Here's a link to read for yourself:

http://www.afpdonline.org/index2.php?option=com_content&do_pdf=...

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Permalink Reply by Daniel Cohen on April 5, 2010 at 10:58pm

In California a paid gift certificate can not expire. any expiration date is void. So it seems that state law may supercede the act. Unless it overrides state laws> Then we would have a limit to the obligation.

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Permalink Reply by Relax & Rejuvenate on April 6, 2010 at 2:21pm

Daniel Cohen said:

In California a paid gift certificate can not expire. any expiration date is void. So it seems that state law may supercede the act. Unless it overrides state laws> Then we would have a limit to the obligation.

States can always be more stringent than the federal law, but never less, so the NEVER EXPIRES clause in the Bankrupt State will continue to apply. I wonder if CA will apply this same high standard to the IOUs they issued to their citizens instead of tax refunds?