For consumer groups, gift card rules fall short of the possible
Despite whatever Benjamin Franklin might have had to say on the subject of earned pennies, a general-purpose gift card saved is money wasted. And new federal regulations aren’t likely to change that.
New gift card rules announced by the Federal Reserve on Tuesday rankle some consumer groups because they curtail — but don’t eliminate — the practice of slapping some consumers with fees for not spending balances fast enough.
The rules, which apply to cards purchased after Aug. 22, prohibit gift card issuers from charging fees in the first year after a card was purchased and, after then, from charging more than one fee in a month. The cards also can’t expire in fewer than five years, and all terms and conditions needs to be disclosed at the time of purchase.
That isn’t enough, according to consumer groups that for years have pushed for tougher rules in two categories of gift cards. Consumers spend an estimated $50 billion annually in traditional store-credit cards — those that can be spent only at one retailer — and so-called general purpose cards, which are branded with credit card logos and can be used wherever that credit card is accepted.
The store cards rarely carry fees, and expiration dates on those cards seldom are less than five years. That’s because retailers want to bring cardholders to the stores, where they are likely to spend above and beyond their card balances.
