Yesterday, the Federal Reserve Board (Board) published final rules amending Regulation E to implement Title IV of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) regarding fees and expiration dates on gift cards.

    Fee Restrictions

    The final rules prohibit dormancy, inactivity and service fees on gift cards unless (i) the consumer has not used the card for at least one year, (ii) no more than one such fee is charged per month and (iii) the consumer is given clear and conspicuous disclosures of the fees. Fees subject to the restrictions include monthly maintenance or service fees, balance inquiry fees and transaction-based fees (e.g., reload fees, ATM fees and point-of-sale fees).

    The final rules also prohibit fees for replacing an expired card or refunding the remaining balance if the underlying funds remain valid.

    Expiration Date Restrictions

    The final rule prohibits the sale or issuance of a gift card that has an expiration date of less than five years after the date (i) a card is issued or (ii) funds are last loaded. The expiration date restrictions apply to a consumer’s funds, and not to the card itself.

    Covered Gift Cards

    The rules generally cover (i) gift certificates, (ii) store gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and (iii) general-use prepaid cards, which are redeemable at merchants that accept network-branded cards. The rules do not cover reloadable prepaid cards that are not marketed or labeled as gift cards or gift certificates and prepaid cards issued as part of a loyalty, award or promotional program.

    Effective Date

    The rules apply to gift cards sold on or after August 22, 2010. Contact us for more information.

    • Judy Scheiderer