Community | November 17, 2009 | 7 comments

Fed proposes new rules for gift cards fees

source: http://www.cnbc.com/id/15840232?video=1332621674&play=1

jmsrmy
The U.S. Federal Reserve stepped up its consumer protection efforts for the second time in less than a week on Monday, proposing to limit the ability of gift card issuers to impose excessive fees. The Fed proposed banning any fees for the first year, and limiting gift card issuers to one fee per month if the card is not used for at least a year. It also requires clear disclosure to the consumer about possible penalties.Last week the central bank banned overdraft fees on automated-teller-machine and debit-card transactions unless consumers have actively selected an overdraft protection service.
(Daly, C. B., 2009, November 16, par.1-2)

“The rules would protect consumers from certain unexpected costs and would require that gift card terms and conditions be clearly stated,” the Fed said in a press release. The rules would also prohibit the cards from expiring before five years have passed from the date the card was issued or five years from the date additional funds were added to the card. Gift cards are essentially an interest free loan to the issuer from the purchaser.
(Daly, C. B., 2009, November 16, par.3-5)

The Fed has come under fire in recent months for not taking an active role in its duty to protect consumers. The Obama administration has proposed creating a separate Consumer Financial Protection Agency that would focus exclusively on consumer issues. Congress still has to approve its creation.
(Daly, C. B., 2009, November 16, par.6-7)

Source links:
http://www.cnbc.com/id/15840232?video=1332621674&play=1
http://abcnews.go.com/Business/wirestory?id=9094804&page=1

http://theretailsector.wordpress.com/2009/11/17/fed-proposes-new-rules-for-gift-...
  1. groups:
    Community,   Videos,   The Retail Sector
  2. tags:
    Federal Reserve,  Gift cards
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7 comments // Fed proposes new rules for gift cards fees

  • artemis6
    • 0
      artemis6  

    • OOOh , NOW they care . I say get rid of them ( the fed ) altogether . Didn't they recently admit to misplacing billions of dollars ?

    • 2 years ago
  • vicgal
    • 0
      vicgal  

    • "The Obama administration has proposed creating a separate Consumer Financial Protection Agency that would focus exclusively on consumer issues."

      at long last! that would be amazing!!!

    • 2 years ago
  • perlpunk
    • 0
      perlpunk  

    • i couldn't believe people would agree to buy something that would forfeit your money after an elapsed time. not like any of that money is real anyway, it just appears that way.. we're all slaves.

    • 2 years ago
  • UWAZell
    • 0
      UWAZell  
    • perlpunk:

      Some stares actually regulate these things in order to protect the consumer already. When I lived in Fl I recall the State passing a law which essentially provides that gift cards don't expire if purchased w/in the State.

    • 2 years ago
  • ScorpioGee
    • 0
      ScorpioGee  
    • perlpunk:

      I cant see the purpose of a card depleting in value overtime in the first place. I know in theory creating Gift Card is having an disposable Debit Card. I work in a major retail store where our gift cards never deplete in value and it's for a good reason, to be fare to the customer.

      I guess it's the cards that's purchased out of the store like a gift card from visa or out of the supermarkets.

    • 2 years ago
  • good_stuff
    • 0
      good_stuff  

    • Wait, so I just elected to get overdrafts put onto my credit card as a "cash advance", which costs 5 dollars plus 3% of the amount plus a 35% apy if it isn't paid off the next month. So if I hadn't signed up for this service I couldn't be charged anything? What is wrong with this world?

    • 2 years ago
  • Mark701
    • 0
      Mark701  

    • To be honest there should be no fees associated with these cards. Give them a "must be used by date" and nothing more. It takes no effort of the issuers part to maintain the card so the fees are just a way of ripping people off. In fact, these cards are probably issued with the hope that they'll never be used, which makes it free money for the bank.

    • 2 years ago
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