Fed Targets Gift Cards

The Federal Reserve is on a consumer protection roll. Last week, the Fed tackled overdraft fees on point-of-sale and ATM transactions (see Hooray for the New Overdraft Rules). Today, the Federal Reserve announced proposed rules concerning gift cards aimed at fees on the cards and expiration dates (see press release). The highlights are that providers cannot charge fees unless:

1. The card is inactive for one year;
2. No more than one fee is charged monthly; and
3. The provider gives notice of the fees to the consumer.

Moreover, cards cannot expire for at least five years after purchase or reloading of the card. Both store-specific and network based cards are covered by the rules.

- JSM