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Federal Reserve Wants Your Opinion About Gift Card Fees

by Flexo on November 17, 2009

in Consumer

The Credit CARD Act of 2009 instructed the Federal Reserve to enact new regulations for gift cards. I have a love/hate relationship with gift cards; they’re convenient gifts to give when you know the recipient is a fan of a certain store. Unfortunately, the past few years have seen restrictions added to gift cards which make them unappealing. Some gift cards expire if not used within a certain amount of time, rendering the money spent to buy the card worthless. Some gift cards come with a monthly fee or an inactivity fee.

It makes more sense to simply give cash rather than a gift card, eliminating the third-parties like stores and payment processors and eliminating any limitations to its use. This avoids the issue of whether fees should be charged for these products. But some people consider the gift of cash inappropriate, more than those who consider the gift of gift cards inappropriate. Thus, the Congress and now the Federal Reserve wants to protect those who choose to buy and those who receive gift cards.

The new regulations call for an elimination of inactivity fees (until the card has been inactive for a year) and eliminations of fees for balance inquiries and transactions. All of the changes to gift cards by law do not need to be made effective until August 22, 2010.

The Federal Reserve is preparing to accept comments from the public for thirty days. You can read the full proposed regulation and in the next few days, you can begin to submit your comments to the Fed here. (Look for Regulation E, R-1377.) Here are some questions to consider as you formulate your comments:

  • Are these restrictions necessary when consumers can easily choose not to purchase gift cards?
  • Would better disclosure be better than restricting fees?
  • There is a cost to offering gift cards; how should stores pay for those expenses if not with fees?
  • Should all gift card fees be eliminated, so gift cards are as good as cash in all cases?
  • Why wait until August 22? Can the new regulations be implemented sooner?

Photo credit: _rockinfree

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News and Blogs, Monday, November 24, 2008

by Flexo on November 24, 2008

in Link Sharing

Reminder: While I am on vacation this week, Consumerism Commentary is featuring articles by other writers. Please read Criminal Charges: Volume XVII, the first of this week’s guest articles.

Rescue Deal for CitiGroup. Citi is too big to fail, so the government is preparing an injection of $20 billion in addition to the $25 billion the company has already received. GM, Ford, and Chrysler are quoted as whining, “It’s not fair!”

Wall Street versus Pennsylvania Avenue. According to the Presidential Cycle, the stock market loses ground during the first half of a new president’s term while increases significantly during the second half. Statistics prove this to be true, but here’s why you shouldn’t abandon stocks for two years.

Gift Cards: A Bad Idea Gets Even Worse. This is bad news for office Secret Santa exchanges. Now we’ll have to think about what trinket someone else may like.

180th Carnival of Personal Finance. Living Almost Large is hosting this edition of the Carnival of Personal Finance with pictures of foreign paper currency. In addition to the Editor’s Picks, check out Visualizing $10,000 Extra in Your Life, The Not-so-Easy Part of Personal Finance, and Financial Education in Schools.

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