After floating the idea of limiting fees and restrictions on gift cards last fall, the Federal Reserve has finally finalized a new set of rules. Even so, I’d still make the case that cash is the better, certainly more practical, and arguably more thoughtful gift, even if there are those who think of it as crass. So if anyone’s shopping for me …
From the Fed’s announcement:
The final rules prohibit dormancy, inactivity, and service fees on gift cards unless: (1) the consumer has not used the certificate or card for at least one year; (2) no more than one such fee is charged per month; and (3) 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.
Not to state the obvious or anything, but before and after these rules go into effect, there are no such fees or expiration dates with cold hard currency.
A Consumer Reports blog also says that the new rules don’t go nearly as far as they should to protect consumers:
The new rules don’t adopt several provisions requested by a coalition of consumer groups, including Consumers Union, publisher of Consumer Reports. Among them are a caps on fees, a strict prohibition on card-expiration dates shorter than five years, and a requirement that issuers provide one free replacement of a lost or stolen card.
Also, the restrictions on fees and expiration dates don’t apply to cards issued as part of loyalty, award, or promotional programs, or to “reloadable” cards not labeled or marketed as a “gift card” or “gift certificate.”
Finally, the rules don’t protect consumers if an issuer files for bankruptcy protection or goes out of business. When the retailer Sharper Image filed for bankruptcy protection in 2008, it first placed restrictions on the use of its gift cards and then stopped accepting them altogether.