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Fed issues new gift card rules

New regulations designed to protect consumers from surprises.

By Karen Datko Mar 24, 2010 12:05PM

This post comes from James Limbach at partner site


The Federal Reserve Board has announced final rules that will restrict the fees and expiration dates that may apply to gift cards. The rules are expected to protect consumers from certain unexpected costs and require that gift card terms and conditions be clearly stated.


The new regulations prohibit dormancy, inactivity and service fees on gift cards unless:

  • The consumer has not used the certificate or card for at least one year.
  • No more than one such fee is charged per month.
  • The consumer is given clear and conspicuous disclosures about the fees.

Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded.

The new rules generally cover retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.

The new rules take effect Aug. 22. The current rules covering gift cards have been the source of numerous complaints. For instance:

  • Lois of Chicago told that she activated her American Express gift card "and tried to use the $50 at a dinner out, only to find we could use only $35 and service charges had used up the rest. What a rip-off."
  • "I received a $25 American Express gift card as a gift," wrote Patrick of Redondo Beach, Calif. "The card was purchased the previous year and given to me a few months ago. I checked the card two weeks ago, went to use it and it was rejected. It seems that AmEx has been deducting $2 a month from the card for the last several months."

It wasn't long after received these complaints that AmEx did away with its gift card fees.


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