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At-a-Glance Card 'Rulebook'

Gift CardsKey things you need to know

Gift cards are a special form of prepaid card. The federal Gift Card Rules took effect in August 2010, offering consumer protections for users of…


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Gift cards are a special form of prepaid card. The federal Gift Card Rules took effect in August 2010, offering consumer protections for users of this specific type of prepaid card. The Gift Card Rules do not cover “reloadable general purpose” prepaid cards that are not intended for gift giving. The rule allows fees and expiration dates on cards given as a reward or for promotional purposes but requires that you are given information about the dollar amount of the fees, when they would be charged and the date the card expires. An example of a reward or promotional card would be a $25 gift card given to you by a store when you buy a $1,000 TV.

Expiration

Gift cards cannot expire for at least five years after the last time they were loaded with money (which, in most cases, would be the purchase date). Since many cards exhibit an expiration date to make them useable online, a card may have to be replaced within the first five years even if it still has a balance on it. There is no charge for this.

You could have a card that is five years old but because you loaded money on the card two years ago, that money won’t expire for eight years from the time you bought the card. If your card expires and there is unspent money on it that you loaded within the past five years, you can request a replacement card at no charge.

Many states do not permit gift cards to expire. (Typically, state law prevails if it is stronger than federal law.) Consumers Union provides a list of gift card consumer protection laws by state. You also can visit your state’s consumer protection office for more information. Find contact information in the Consumer Action Handbook.

Fees

The Gift Card Rule limits some fees but does not prohibit all fees. Fees must be disclosed on the gift card or on its packaging. Make sure you read the card disclosure carefully to learn about the card’s fees. When charged, fees are subtracted from the balance on the card.

Examples of allowable fees include upfront purchase fees and lost or stolen card replacement fees. Not all card issuers charge these fees, and amounts vary.

    The Gift Card Rule limits these fees:
  • Inactivity/dormancy fees. Inactivity fees (also called “dormancy fees”) can be charged only if the gift card has gone unused for at least 12 months. No more than one such fee can be assessed per month, and the amount of the fee must be clearly disclosed before the gift card is purchased.
  • Replacement card fees. Gift card issuers cannot charge a fee for replacing an expired card if the replacement is required so that the cardholder can access the available funds for a full five years from the date of the last time funds were loaded on to the card (which typically is the purchase date). A card issuer can charge a fee to replace a lost or stolen card, though not all do.

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At-a-Glance Series