As reported previously on the CFPB-Lawblog, the CFPB declared its intent to “extend federal consumer protections to prepaid [credit] cards.” Last week, the CFPB took another step in that direction by announcing it would weigh in on whether state laws regarding prepaid gift cards are pre-empted by the requirements of the Electronic Fund Transfer Act and Regulation E. Specifically, the CFPB is reviewing whether Maine’s and Tennessee’s laws that consider gift cards to be “abandoned” after two years of inactivity conflict with federal law that generally prohibits the sale of a gift card with an expiration date under five years. Earlier this year, the Third Circuit Court of Appeals held that a New Jersey law, which also considered gift cards to be abandoned after two years of non-use, was not pre-empted by federal law. N.J. Retail Merchants Ass’n v. Sidamon-Eristoff, 669 F.3d 374 (3d Cir. 2012), reh’g denied (3d Cir. Feb. 24, 2012). The New Jersey state legislature subsequently amended its unclaimed property law to lengthen the time period from two years to five years.
The CFPB specifically requests public comment on “whether provisions of unclaimed property laws in Maine and Tennessee relating to gift cards are inconsistent with federal law or provide consumers greater protection than federal law." The public has 60 days from the date the notice is published in the Federal Register, or until approximately October 16, 2012, to review and provide comments on the proposed rule. The CFPB has not announced when it anticipates making a determination.