Fed Lays Out New Gift Card Rules

Tougher restrictions have come down on companies offering gift cards.

The Federal Reserve Board on Monday proposed rules that would restrict the fees and expiration dates that may apply to gift cards. The rules generally cover retail gift cards.

For years, gift cards in general have come under scrutiny for their dormancy fees and expiration dates, which have generated numerous consumer complaints as shoppers head to the store to use the cards only to find they have expired or are no longer worth the face value. Dozens of states have enacted or introduced legal protections for consumers regarding gift cards.

The new Federal rules would protect consumers from certain unexpected costs and would require that gift card terms and conditions be clearly stated.

The rules would prohibit dormancy, inactivity, and service fees on gift cards unless:
(1) There has been at least one year of inactivity on the certificate or card
(2) No more than one such fee is charged per month
(3) The consumer is given clear and conspicuous disclosures about the fees. Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded.

Comments on the proposal must be submitted within 30 days after publication in the Federal Register, which was expected shortly.