This is the first post in a series covering prepaid products which are excluded from the new federal gift card rules.
The new federal gift card rules cover most of the prepaid products consumers will receive as a gift this holiday season. However, there are some exceptions and one such exception is for any card given as part of a loyalty, awards or promotional program.
Case and point, InComm recently changed the name of their popular B2B gift card program Smart GiftCard Solutions to the Vanilla Visa Reward Card. Removing the term "gift card" was necessary to avoid being classified as a gift card and therefore governed by the new federal gift card laws. The Vanilla Visa Reward Card is sold directly to businesses in bulk orders of 50 or more. It's intended to be given to consumers for free as part a promotion, employee gift, contest, incentive or sweepstakes.
Here is a quick breakdown of fees one might incur with the Vanilla Visa Reward Card:
- $2.50 monthly fee beginning 6 months from purchase the purchase date
- $5.95 fee for replacing lost, stolen or damaged cards
- Minimum 24 month "Valid Thru" date
- Funds do not expire, but consumers must pay a $5.95 re-issuance fee to access the funds after the "Valid Thur" date
The Vanilla Visa Reward Card fees schedule is similar to what we saw with the Vanilla Visa Gift Card before the effective date of the CARD Act's gift card provisions.
The Vanilla Visa Reward Card's Cousin
The Vanilla Visa Reward Card has a cousin, Vanilla Visa Gift Card; and it offers much more consumer friendly terms. It also falls under the the federal government's new gift card rules and is sold directly to consumers. While the Vanilla Visa Gift Card offers much better terms after the sale it will have a higher purchase fee. Businesses looking for a gift card supplier to sweeten an offer or reward customer loyalty, will likely to find the lower purchasing fee of the Vanilla Visa Reward Card attractive and they will inevitably end up in the hands of consumers.
Consumer Gift Card Tip:
If you receive a gift card from which is not clearly labeled as a "gift card", be sure to double check the terms. It's possible you're recent gift just might come with some short strings. Here are some examples of of when you might receive a incentive card:
- Buy a product and receive a "free $50 Visa Card"
- A gift from an employer to it's employees
- A contest, winner will receive a "$50 Visa Card"
- Spend $500 and get a "free Visa Card"
Below is an example from Big Bear Lake Resort Association's website: