As part of the Credit Card Liability Disclosure and Liability Act of 2009, Congress targeted many of the practices related to consumer-purchased gift cards. If your business issues gift certificates or gift cards, you’ll want to be familiar with the rules that went into effect on August 22, 2010.
Some of the changes include restrictions on service fees for dormant or dormant cards. In the past, consumers could receive a card as a gift or save it and forget about it. Card issuers would charge fees to the card so that, over time, the balance would reduce, eventually to zero. Under the new gift card rules, they will only be allowed to collect these fees if there has been no activity on the card within the one-year period prior to the fee being charged. The business card issuer or is also restricted from being able to charge a fee per calendar month. In addition, they must clearly and conspicuously disclose any fees on the gift certificate or gift card and the disclosures must be provided to the purchaser prior to the purchase of the gift card.
Restrictions will also be placed on the expiration dates of gift cards and gift certificates. The money on a gift card or certificate cannot expire for a period of five years from the date of issuance (or the last load of funds for gift cards). As with fees, expiration must be clearly indicated on the gift certificate or gift card and must be disclosed prior to card purchase.
If your business sometimes issues “promotional” gift certificates that are essentially coupons, you may also be subject to some of these rules. To avoid consumer confusion, the new rules require that if you issue a loyalty, reward or promotional gift card or gift certificate, it must clearly begin on the front that it was issued for that purpose. For example, if you are a restaurant and you submitted 5,000 promotional “gift certificates” for $5 each in your local newspaper, you will be prompted to start with the gift certificate that was for promotional purposes and the expiration date of the gift certificate. , if any If a “gift certificate” is issued for promotional purposes, the 5-year expiration date rule does not apply.
If your small business uses gift certificates or gift cards, it’s a good idea to make sure you understand these rules and have the proper policies and procedures in place to ensure you’re following the new rules. With the overwhelming number of regulations affecting small businesses on an almost daily basis, it’s important to make sure you’re receiving the proper business, financial, and legal guidance from your accountant and attorney on these issues.