Retail: New Federal Legislation Impacts Gift Cards
8/26/2010
Federal legislation impacting gift card expiration dates and fees went into effect on August 22. This new legislation includes numerous changes that will directly affect retailers, including:
- Gift cards must be good for at least five years from the purchase date and any money added at a later date must also be good for at least five years.
- Consumers may use unspent money on a card even after it expires if the card expiration date takes place prior to the fund expiration date; in cases such as this, consumers may request a replacement card.
- Fee limits have been enacted for card dormancy or inactivity as well as on card maintenance fees, and the legislation permits retailers to charge a fee to replace lost or stolen gift cards.
- Retailers are now required to clearly disclose all fees and restrictions on the card or card packaging; the legislation, however, does not mandate parameters for this disclosure.
Some exemptions to the new legislation do apply, including the following types of cards:
- Certain reloadable pre-paid cards not intended or marketed as gift cards are exempt from the legislation.
- Cards given as any kind of reward or promotion are excluded from compliance requirements.
- Any cards offering a free item or a percentage off are excluded, providing there is no dollar value attached.
For more information about this legislation and how it may impact your company's card sale or distribution policy, please contact Richard Schurig, CPA, partner and Retail and Consumer Products Industry Practice director, at
rschurig@jhcohn.com or 973-364-6670.