Gift Card Blog - ScripSmart

Not Governed By New Federal Gift Card Laws: Incentive Gift Cards

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:

Wells Fargo Eliminates Gift Card Expiration and Monthly Fees

There's more evidence, the CARD Act of 2009 is having a positive impact on the terms of bank-issued gift cards. Wells Fargo has announced both the Wells Fargo Visa Gift Card and the Wachovia Visa Gift Card no longer have monthly fees and the funds never expire.

While they could impose fees and expiration dates, it's good to see Wells Fargo join a growing group of companies who have eliminated expiration dates and monthly fees for gift cards. The purchase fee of $3.95 is also on the lower side of the spectrum for a bank-issued gift card.

Remember ScripSmart can help you find the best Visa gift cards. Just check ScripSmart's Gift Card Score® for any gift card before making the purchase.

One Negative Side Effect

It appears the CARD Act of 2009 continues to have one negative impact for consumers: bank-issued gift cards which were once redeemable outside the U.S. are now only redeemable within the U.S.; It's a worthwhile trade off and we believe a direct result of the 'only one fee per month' requirement of the CARD Act of 2009.

Another Option For International Use

If you're looking for a product which is accepted like a credit card outside the U.S., consider a reloadable pre-paid visa card like the Walmart MoneyCard. There will be more fees; however, it's flexibility may make those fees worthwhile.

Remember only bank-issued gift cards are covered by the new federal rules. Here are some signs which may indicate your buying a product which is not governed by the new federal gift card rules:

• It's not marked as a 'gift card'
• It's reloadable
• It requires a social security number when first purchasing
• It's intended as a substitue for a checking account

One last thing to note: you must be a Wells Fargo or Wachovia customer to purchase either gift card.

CARD Act of 2009 - Gift Card Impact (Part 3)

This is the third post in a series discussing the impact of the CARD Act of 2009 on gift cards.

So far, ScripSmart has focused on gift card reviews for the largest merchants in the United States. We figure it's a great way to maximize coverage for consumers. Based on our research, we can confirm most store issued gift cards (iTunes, Amazon.com, McDonald's) do not impose expiration dates or post-sale fees. As a result, they will not be affected by the new federal gift card regulations.

However, we have reviewed a few store issued gift cards which imposed expiration dates. Today we're going to see where things stand for these gift cards before and after the CARD Act of 2009's gift card provisions. We'll also see how the Gift Card Score® of each gift card changed.

Bass Pro Shops Gift Card

Before the CARD Act, the Bass Pro Shops Gift Card:

• Expired after 24 months of inactivity.
• No post-sale fees
• No expiration details were listed on basspro.com
• Gift Card Score: 54

After the CARD Act:

• No expiration date
• No post-sale fees
• Expiration detail are listed on basspro.com
• Gift Card Score: 83

Bass Pro Shops experienced a significant increase in Gift Card Score because they eliminated the expiration dates and are now clearly disclosing expiration and fee details to consumers before making a purchase online.

Petco eGift Card

Before the CARD Act:

• Expires 1 year from purchase date
• No post-sale fees
• Expiration details are listed on petco.com
• Gift Card Score: 44

After the CARD Act:

• Expires 1 year from purchase date
• No post-sale fees
• Expiration details are listed on petco.com
• Gift Card Score: 44

The Petco eGift Card remains unchanged.

Buy.com eGift Card

Before the CARD Act:

• Expires one year from purchase date (unless the eGift Card is added to a buy.com account)
• No post-sale fees
• No expiration details listed on buy.com
• Gift Card Score: 23

After the CARD Act:

• No expiration date
• No post-sale fees
• No expiration details listed on buy.com
• Gift Card Score: 57

Buy.com had one of the more unusual expiration dates. We're happy to see they moved away from the one year expiration, but there is still a lot of room to improve the program.

Above the federal minimum

Two of the three gift cards eliminated the expiration date altogether. It's great to see Bass Pro Shops and Buy.com make a move to simplify their gift card programs for both consumers and employees.

Regarding Petco: both their website and customer service team are informing consumers the Petco eGift Card expires in one year, or the earliest date permitted under the law.

Here is the latest email communication with Petco.

On August 28, 2010, at 2:16 PM, Petco wrote:

"PETCO.com Gift Certificates and unused portions of Gift Certificates expire one year from the date of issue or on the earliest date permitted under applicable law, whichever occurs later. The foregoing expiration date for these online Gift Certificates is not applicable in California and New Hampshire."

As of August 30, 2010, this is the same information is posted on the petco.com website:

 

While a disclaimer states "or on the earliest date permitted under applicable law, whichever occurs later", it's apparent Petco is not up-to-date with gift card laws. I've asked Petco to double check the expiration and mentioned the CARD Act of 2009, but have not received a response, yet.

Gift card buying tip for consumers:

While most store issued gift cards do not carry fees or expiration dates, the quality of gift card programs in the marketplace vary greatly.

Gift Card Score is designed to help consumers easily find the best gift cards; if you are are looking to find the best restaurant gift cards, take a minute to review the gift card categories page for restaurants; we sort gift cards by score and this particular category has Gift Card Scores ranging from 89 to 55.

Remember, a great gift card is more than just no expiration date or fees. Gift Card Score is derived from a patent pending algorithm which analyzes over 30 attributes.

CARD Act of 2009 - Gift Card Impact (Part 1)

This the the first in a series discussing the impact of the CARD Act of 2009 on gift cards.

The impact of the New Federal Gift Card Law is beginning to show. Last night while shopping at my local grocery store, I noticed a few things at the gift card mall:

1. Some bank issued gift cards were on the shelf with an expiration/valid thru date less than five years while others had an expiration/valid thru date greater than five years. This is allowed until January 31, 2011, see the ECO-Gift Card Act for more details.

2. Several MasterCard Gift Cards slots were empty. It appeared as though they were intentionally removed, not sold out.

3. A sign was posted mentioning the CARD Act of 2009. This is part of the extended disclosure requirements of H.R. 5502 aka the ECO-Gift Card Act and allows gift cards to be sold which do not have the specific disclosure requirements on the gift cards as set forth in the CARD Act of 2009.

One interesting note: according to the sign, there are certain one-time fees permitted under the CARD Act of 2009, such as "properly disclosed initial purchase fees, lost/stolen replacement card fees and cash-out fees".

For a detailed version of the sign, click on the image below.

Gift card buying tip for consumers:

When buying a bank issued gift card, check the expiration/valid thru date and make sure it is at least 5 years from your purchase date. While gift cards with valid thru dates under five years must be replace at no charge, it's still a hassle and you don't want your gift recipient to go through.