Everyone in the gift card industry has been speaking of the recent gift card regulations approved by the Federal Reserve and we decided to chime in as well. So far every state has had its own rules about gift card expiration, dormancy and service fees but there hasn’t been a clear federal rule. It’s high time that the Fed acted to protect the consumer from unexpected gift card fees!
To summarize the new rulings that go into effect on Aug 22nd 2010 –
· Dormancy, inactivity, and service fees must be clearly disclosed upfront and may only be assessed only after at least 1 year of activity and even then only one fee can be charged per month.
· Expiration date cannot be less than 5 years
While we are excited about what this means for the prepaid gift card industry and especially open-loop gift cards (i.e. the VISA, MasterCard cards) that can be used in place of cash at any retailer we don’t see much of an impact to the closed-loop (retailer-specific) gift cards. Most national retailers don’t have expiry dates on their gift cards and do not charge monthly service fees primarily because most of these retailers operate in that state of California which does not allow expiration dates and service charges.
The more interesting statistic though is that 50% of Americans have at least 1 unused gift card and the average number of cards is 3.7. Statistics show that if a card is not used within the first 3 weeks of being purchased or gifted it is forgotten! So yes the extension of the expiry dates and no service fees help but don’t let it give you more reason to forget your gift cards.
Get value out of the gift cards that you receive today - exchange them for cash or a gift card to another retailer that you frequent more often!
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