On May 22, President Obama signed the Credit Card Accountability, Responsibility and Disclosure Act (H.R. 627) which contains important new regulations for gift certificates, store gift cards, and general-use prepaid cards. (We summarized the bill in an alert on May 21.)
The new law prohibits expiration dates less than five years from the date on which the gift certificate was issued, or the date on which card funds were last loaded to a store gift card or general-use prepaid card, and requires that the terms of expiration be clearly and conspicuously stated.
The law also restricts dormancy and service fees and inactivity charges and requires certain disclosures about fees such as the amount of such fee and how often the fee is charged.
The requirements relating to dormancy fees, service fees, and inactivity charges, and the required disclosures, do not apply to any gift certificate that is distributed pursuant to an award, loyalty, or promotional program if no money or other value is exchanged.
The law takes effect August 22, 2010. The Board of Governors of the Federal Reserve System has nine months in which to develop rules, in consultation with the Federal Trade Commission, that relate to the amount of dormancy and service fees and the amount of remaining value of a gift certificate, store gift card, or general-use prepaid card below which such charges or fees may be assessed.