Federal Reserve Board Proposes Gift Card Rules

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Today, the Federal Reserve Board ('Board') released a proposed rule to implement the gift card provisions contained in the Credit Card Accountability Responsibility and Disclosure Act ('CARD Act') that would restrict the fees and expiration dates that may apply to gift cards. Specifically, the proposed rule would prohibit a person from imposing a dormancy, inactivity or service fee with respect to a gift certificate, store gift card or general-use prepaid card, unless certain conditions are met; in this regard, the proposed limitation would apply to transaction-based fees, including reload fees. In addition, the proposed rule would provide that a gift certificate, store gift card or general-use prepaid card may not be sold or issued unless the expiration date of the funds is no less than five years. The proposed rule also would require the disclosure of fees imposed and information regarding whether funds underlying the card may expire.

Please see full update below for more information.

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