Wednesday, March 24, 2010

New Gift Card Regulations Restricting Fees and Expiration Dates Issued by Federal Reserve

On March 23, 2010, the Federal Reserve Board issued final rules to restrict the fees and expiration dates that may apply to gift cards. As explained in a press release on the Fed website, the rules are intended to “protect consumers from certain unexpected costs and require that gift card terms and conditions be clearly stated.” Specifically, “[t]he 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.? Moreover, “[e]xpiration 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 regulations, which are set to take effect on August 22, 2010, presumably could serve as the predicate of a UCL unlawful prong claim. The regulations are contained in long form here, and summary form here.

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