Some years back, gift card issuers would charge service and inactivity fees on gift cards that were dormant for a period of time, and some gift cards were either restricted or cancelled. This created a bad user-experience, as consumers, issuers, industry commenters and consumer groups had negative remarks to make about gift card companies. Rates were increased, gift card balances reduced drastically, even though the cards were untouched by their holders, and new fees emerged without any prior notice. This made the Federal Reserve enact rules to regulate the fees on gift cards, and curb the excesses of gift card companies.
These rules, which mostly deals with consumer protection from credit card companies, also created rules for gift cards. Have you been wondering what the gift card rules for expiration and service fees are? Or you are seeking all you need to know about gift card rules? Come along, as we will be answering your frequently asked questions on gift card rules, expiration and service fees.
Do Gift Cards Expire?
By law, gift cards cannot expire in less than 5 years from the date of purchase, but there may be non-use fees or fees if the card is expired. The law states that a gift card may not expire five years from the date of activation or the date the card was funded, and should there be an expiry date, the terms and conditions of that expiration must be stated during or before purchase. Simply put, companies are to print the expiry date on the card or card packaging. Hence, this could only mean that If there isn’t a date of expiration on the card, the card may remain valid, as long as the store as long as the store remains.
Will I be Charged Inactivity Fees on My Card?
Prior to the Credit Card Accountability Responsibility and Disclosure Act also known as CARD act that was signed in 2009, gift card companies charged fees to fund cards and subsequently made monthly fees compulsory to decrease the balance of the gift card until the loaded value is exhausted.
The CARD laws make gift cards free from immobility, inactivity or service fees unless the card has been untouched for a year. Issuers can only charge fees of inactivity on a gift card if the card is left unused for a year, and service charge or inactivity fee can be issued per calendar month.
Also, the non-use fee terms are made clear prior to purchase. If your card has been dormant, it is still advised that you use any remaining value quickly to stop further inactivity fees from being charged. You may only be charged for service fees on some transactions with your card, such as balance check, balance reload, or on withdrawals.
Are There Exemptions to The CARD Laws?
Yes, these laws do not apply to all kinds of gift cards. They cover retail gift cards and Visa, MasterCard, American Express, and Discover gift cards. However, they do not cover reloadable phone cards, business gift cards, or gift cards bough for business’ sake.
State Laws on Gift Cards
Some states have existing laws that restrict fees on gift cards and the dates some of them expire. It is key to note that a lot of these rules are limited to just store-branded gift cards and not those bank gift cards such as American Express and Visa.
While the CARD laws control and regulate gift card companies, it is important to know that gift cards differ. In case fee information is not clearly stated on your card, you should make more enquires aforehand, as this could prevent you from unwanted fees later on.