This week, the Federal Reserve published a consumer-centric web page on the new gift card laws going into effect August 22, 2010. Here's a quick three bullet summary:
- gift cards funds cannot expire before 5 years,
- post-sale fees cannot be charged for at least one year, and
- both store issued gift cards and bank issued gift cards are specifically included.
This is a step in the right direction and while there are several states already protecting consumers against unruly gift card fees and expiration, most states have specifically excluded bank issued gift cards from state gift card law.
Bank issued gift cards are the ones with Visa, MasterCard, American Express and Discover logos. They're much more flexible when it comes to where you spend your money, but tend to have more fees and shorter expiration dates. As a result these cards score much lower on ScripSmart's Gift Card Score algorithim.
We've recently finished a comparison of new federal gift card law vs. state gift card law and the result: every state is affected. I was a bit surprised by the fact that only two states have specifically included bank issued gift cards in their state gift card laws: Vermont and Hawaii. In fact, American Express specifically states it will not ship gift cards to VT and HI.
Holiday 2010 may be the year bank issued gift cards really take a jump in consumer demand. However, it will be interesting to see what happens to the purchase fees for such cards; one must assume they will increase. Today, the going rate for a bank issued gift card is $3.95 on top of the value of the gift card.
Keep in mind, bank issued gift cards not intended for gift giving purposes are exempt form the new federal gift card law. For example, the Walmart MoneyCard would be exclude, but the Walmart Visa Gift Card included.