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November 22, 2010


DiNapoli: Gift Card Legislation Enhances Consumer Protections

State Comptroller Thomas P. DiNapoli today reminded consumers to spend the gift cards they received last holiday season and to ask appropriate questions when purchasing new gift cards.  Many but not all gift card sellers have eliminated fees and expiration dates, DiNapoli said.  

“Money is tight for families during this holiday season,” DiNapoli said. “Even though gift card legislation has taken effect, some retailers are still permitted to charge certain fees. Consumers should continue to check the terms and conditions of all the gift cards they buy or receive and use gift cards promptly.  No one wants to lose money on a gift.”

The Federal Credit Card Act of 2009 included provisions for gift cards that became effective August 22, 2010 and applies to cards sold after that date.  Under the Act, many types of retail cards are prohibited from charging inactivity fees unless the card has been inactive for at least 12 months.  All terms and conditions for a card must be disclosed directly on the card.  Additionally, gift cards may not expire for at least five years after purchase.

Beginning January 1, 2011, New York will require companies offering rebates to disclose whether those rebates will be issued in the form of a gift card, and whether any fees will apply to those cards.  Rebate cards are not covered by the same rules as regular gift cards, so this disclosure will help consumers identify the different cards and how they can be used.

Gift cards may still have terms and conditions that can decrease the value of the gift card.  These include charging:
  • a service fee when the card is purchased;
  • a dormancy fee if the gift card is not used within a certain period of time;
  • a fee to call and check the balance remaining on the card; and    
  • a replacement fee for lost or stolen gift cards. The bar code number and proof of purchase are needed to replace cards.

DiNapoli reminded consumers that gift cards may expire, and if an item costs more than the value of a card, consumers may not be able to split payment between the card and another method of payment.

DiNapoli said the increase in the type of services for which gift cards can be purchased is another reason for heightened consumer awareness. Gift card sellers now issue gift cards for returned merchandise or refund; those cards can be used the same way as gift cards.  Cards can be purchased and redeemed at the seller’s physical location, the seller’s website and partner websites.

Unused gift card values issued by New York corporations are required to be turned over to the Comptroller’s office as abandoned property after five years of dormancy.



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