How many of you remember receiving gift cards for birthdays, holidays, and special events? You were always so excited to get one because it meant that you had the chance to pick out not only what you wanted, but also pick it out when you wanted it. There wasn’t any hassle with having to deal with getting a gift receipt, returning the product to the store within the designated time frame, and then having to buy something that day (usually before you lost that small slip of paper that indicated you had store credit).
However, gifts cards were both the best and worst gift ever. Many of them had expiration dates within the year, inactivity fees that would gradually deplete the entire balance on the card, and transaction fees just for using the gift cards!
The CARD Act attempted to address many of these problems, but consumers need to be aware of several problems that still exist.
The CARD Act only applies to gift cards issued by retailers and those gift cards with a Visa, American Express, MasterCard, or Discover logo that don’t fall under the label of prepaid cards. Some of the enacted under the CARD Act can be found on the Federal Reserve’s website and include:
- Limits on Expiration Dates: The money that you put on a gift card is good for at least five years from the date that the card is purchased
- Replacement Cards: If your card expires, you can often call the company that issued it and ask for a replacement card
- Fees Disclosed: Gift card issuers must clearly disclose all fees
- Fee Limits:
- The CARD Act limits the amount of fees, such as maintenance, dormancy or inactivity, usage, and fees for adding money to your card UNLESS
- You haven’t used your card for at least a year, and you are only charged one fee per month
- The CARD Act limits the amount of fees, such as maintenance, dormancy or inactivity, usage, and fees for adding money to your card UNLESS
The rules mainly address the concern that consumers were being taken advantage of by companies who would hide expiration dates in obscure places or put high fees in place that essentially deprive uninformed consumers of the full value of their gift cards by charging them for simply using their gift cards.
There are still several gaps left in the rules that gift card issuers can use to take advantage of consumers. For instance, gift card issuers can still charge fees if they include them in the purchase price of the gift card. There is also a debate over what should happen in states (like Maine and Tennessee) where gift cards are considered abandoned property after they are not used for two years.
There are also several scams to be aware of when buying gift cards. The Internet has provided many benefits, but it has also provided an easy avenue for scammers to defraud the unsuspecting consumer. According to the Federal Trade Commission (FTC), online auction sites may allow fraudsters to sell gift cards that are counterfeits or stolen.
This past winter, text message gift card scams ran rampant. The Better Business Bureau (BBB) recently drew attention to text message gift card scams and explained how the scam works. According to the BBB, the texts are a way of gaining personal information from consumers for various advertisers. The FTC is aware of this issue. In a press release from March 7, 2013, the FTC stated that it is targeting the senders of the unwanted text messages and the operators of the associated websites through several lawsuits.
If you have a general problem with a gift card, the FTC suggests that you contact the company who issued the gift card first to see if they can resolve the problem. If that doesn’t work…
- For Cards Issued by Retailers: Issue a complaint with the State Attorney General or contact the FTC here.
- For Cards Issued by National Banks: Send an email to the Comptroller of the Currency’s (OCC) Customer Assistance Group at customer.assistance@occ.treas.gov