The Federal Trade Commission, the nation’s consumer protection agency, has tips and information for consumers who use gift cards for holiday gift-giving. New federal rules that took effect are designed to protect consumers, and will restrict fees and affect gift card expiration dates. These new rules apply to two types of cards: Retail gift cards, which can only be redeemed at the retailers and restaurants that sell them; and bank gift cards, which carry the logo of a payment card network like American Express or Visa and can be used wherever the brand is accepted. Here are the highlights:
- Money on a gift card cannot expire for at least five years from the date the card was purchased, or from the last date any additional money was loaded onto the card. If the expiration date listed on the card is earlier than these dates, the money can be transferred to a replacement card at no cost.
- Inactivity fees can be charged only after a card hasn’t been used for at least one year, and then only once per month. But fees may be charged to buy the card or to replace a lost or stolen card.
- The card must clearly disclose its expiration date, and the card or packaging must clearly disclose any fees. There is one exception: Some cards produced before April 1, 2010, that list a short expiration time or inactivity fees in the first year may be sold through January 31, 2011. However, no matter what a card says, consumers still are protected by the new rules.
Tips for buying gift cards:
- Buy from known and trusted sources. Avoid online auction sites, because the cards sold there may be counterfeit or may have been obtained fraudulently.
- Read the fine print before buying. Is there a fee to buy the card? Are there shipping and handling fees for cards bought by phone or online? Will any fees be deducted from the card after it is purchased?
- Inspect the card before buying it. Verify that no protective stickers have been removed, and that the codes on the back of the card haven’t been scratched off to reveal a PIN number. Report any damaged cards to the store selling the cards.
- Give the recipient the original receipt in case the card is later lost or stolen.
- Before you buy retail gift cards, consider the financial condition of the retailer or restaurant:
- A card from a company that files for bankruptcy or goes out of business may be worth less than anticipated.
- If the business closes a store near the recipient, it may be hard to find another location where the card can be used.
- A company that files for bankruptcy may honor its gift cards, or a competitor may accept the card. Call the company or its competitor to find out if they are redeeming the cards, or if they will do so at a later date.
Tips for using gift cards:
- Note any terms and conditions, and check for an expiration date or fees.
- If it appears that a card has expired or fees have been deducted, contact the company that issued the card. Ask whether the card can be honored or the fees can be reversed.
- Ask anyone who gives you a card for its terms and conditions, the original purchase receipt, or the card’s ID number. Keep this information in a safe place.
- Use gift cards as soon as possible, because it’s not unusual to lose or forget about them.
- Treat a card like cash, and if it is lost or stolen, report this immediately to the issuer. Some issuers will not replace cards that are lost or stolen, while other issuers will, for a fee.