Consumers to enjoy new gift card rules this holiday season – National Consumers League

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December 1, 2010

Contact: (202) 835-3323, media@nclnet.org

WASHINGTON, DC— For the fourth year in a row, according to the National Retail Federation (NRF), gift cards are America’s most requested gift this holiday season. New this year, however, are extra safeguards in place for consumers, mandated by the Credit Card Accountability, Responsibility and Disclosure Act of 2009 that went into effect earlier this year. Starting in August, the CARD Act has made for numerous changes in the credit card industry, and – good news for gift card givers and receivers this holiday season – it also has some implications for the gift card industry. According to the NRF, Americans will spend an average of $145.61 on gift cards, up from $139.91 last year. Total gift card spending is expected to reach $24.78 billion.

“There’s good news for consumers planning to purchase gift cards for friends and loved ones this holiday season, as well as for those of us who receive them,” said Sally Greenberg, NCL Executive Director. “With sales of gift cards expected to reach nearly $25 billion this year, it’s about time consumers benefited from improvements to the industry’s practices. With better fine print, better expiration dates, and more standardized rules, consumers can buy and use gift cards with greater confidence this holiday season.”

Here are the key elements of the new Credit CARD Act that affect gift cards:

Standardized Expiration Dates. Gift cards cannot expire less than five years after purchase.

Better fine print. Gift card issuers must clearly disclose dormancy and inactivity fees.

No more unused balance fees – for the first year

Starting now, no cards purchased in the previous 12 months can carry fees for going unused. In the past, unused cards lost value more quickly due to these inactivity fees. The good news is that now, issuers must not start tacking on the fees for a full year. The bad news is that there is no limit on the amount of this fee, which can only be assessed once a month.

Fees subject to these restrictions include monthly maintenance or service fees, balance inquiry fees and transaction-based fees, such as reload fees and point-of-sale fees.

Even with better safeguards for consumers in place, NCL is still warning consumers to give and use gift cards wisely. The cards, while offering better features, still come with greater restrictions than cash.

Tips for buying and giving gift cards

  • Encourage the recipients of gift cards to use them quickly to avoid losing the value of the cards to fees.
  • Ask for a gift receipt for each card purchased and include the receipt when giving a gift card. This will allow the cardholder to replace the card if it is lost or stolen.
  • Read all terms and conditions prior to purchasing a card. If the terms are not disclosed or if they are too difficult to understand, consider purchasing a different card.
  • Be wary of gift cards sold on online auction sites. These cards are often stolen or counterfeit.
  • Keep all gift cards and receipts in a safe, easily accessible place to avoid loss and neglect of gift cards.
  • If a card requires registration prior to use, be sure to do so soon after receiving the card.
  • If a card’s value is too low to cover an entire purchase, a merchant may be able to do a “split-tender” transaction that will allow part of a purchase to be paid with the gift card and the balance to be paid by another means (cash, check, credit/debit card). If an employee seems unsure how to conduct a “split-tender” transaction, ask a manager to help.
  • Be aware of state laws pertaining to gift cards. These may affect expiration dates, fees, and card replacement.
  • Don’t throw away depleted cards. Some merchants require a card for returns.

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About the National Consumers League

Founded in 1899, the National Consumers League is America’s pioneer consumer organization. Its mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. NCL is a private, nonprofit membership organization. For more information, visit www.nclnet.org

What’s new with gift cards this season? – National Consumers League

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The Credit Card Accountability, Responsibility and Disclosure Act of 2009 that went into effect earlier this year mandated a lot of changes in the credit card industry. It also has some implications for the gift card industry. There’s good news for consumers planning to purchase gift cards for friends and loved ones this holiday season.

Here are the key elements of the new Credit CARD Act that affect gift cards:

Better expiration dates. Gift cards cannot expire less than five years after purchase.

Better fine print. the gift card issuers must clearly disclose dormancy and inactivity fees.

No more unused balance fees (for the first year). Starting now, no cards purchased in the previous 12 months can carry fees for going unused.  In the past, unused cards lost value more quiclkly due to these inactivity fees. The good news is that now, issuers must not start tacking on the fees for a full year. The bad news is that there is no limit on the amount of this fee, which can only be assessed once a month.

Fees subject to these restrictions include monthly maintenance or service fees, balance inquiry fees and transaction-based fees, such as reload fees and point-of-sale fees.

More you should know about gift cards

The new Credit CARD Act rules do not apply to reloadable prepaid cards that are not marketed or labeled as a gift card or gift certificate. They also don’t apply to prepaid cards received through a loyalty award or promotional program. The majority of the cards we’re used to seeing however, such as those offered by major retailers or card networks like Visa, Mastercard, or American Express, will be covered. However, consumers should be wary of reloadable cards or cards received through the loyalty and promotional programs. A card that would fall into this category is a free “loyalty card” that gives the user $10 off a $50 or more purchase from the same store.  Such cards must still clearly disclose expiration dates and associated fees. These may be hard to distinguish from cards that are covered by the rules.  Consumers should be sure to check the disclosure language on cards to ensure that they are purchasing cards that are covered.

Tips for buying and giving gift cards

  • Encourage the recipients of gift cards to use them quickly to avoid losing the value of the cards to fees.
  • Ask for a gift receipt for each card purchased and include the receipt when giving a gift card. This will allow the card holder to replace the card if it is lost or stolen.
  • Read all terms and conditions prior to purchasing a card. If the terms are not disclosed or if they are too difficult to understand, consider purchasing a different card.
  • Be wary of gift cards sold on online auction sites. These cards are often stolen or counterfeit.
  • Keep all gift cards and receipts in a safe, easily accessible place to avoid loss and neglect of gift cards.
  • If a card requires registration prior to use, be sure to do so soon after receiving the card.
  • If a card’s value is too low to cover an entire purchase, a merchant may be able to do a “split-tender” transaction that will allow part of a purchase to be paid with the gift card and the balance to be paid by another means (cash, check, credit/debit card). If an employee seems unsure how to conduct a “split-tender” transaction, ask a manager to help.
  • Be aware of state laws pertaining to gift cards. These may affect expiration dates, fees, and card replacement.
  • Don’t throw away depleted cards. Some merchants require a card for returns.

Social networking (safely) – National Consumers League

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By Jacob Markey, LifeSmarts Summer 2010 intern

When I was in high school, MySpace was the big social networking craze; then Facebook entered the scene and exploded in popularity. While many other sites are available today, Facebook is the dominant site of choice. With hundreds of millions of users, it now seems as if everyone from kids in middle school to my parents’ friends have a Facebook account! Since the December LifeSmarts topic area focuses on issues relating to Technology, a discussion about social networking and online safety tips is timely.

Many people might see little reason to fear using social networking sites. After all, they are a great way to communicate with your friends, post pictures, and play games. But there is much to be aware of when using these Web sites. Your privacy and security may be at stake if you are careless and don’t take the proper steps to ensure that people can’t obtain information that could be used to hurt you. In addition, what you post on these sites could get you into a lot of trouble with friends, family, coworkers, and others (including future potential employers).

With these concerns in mind, here are some quick, but vitally important, tips people should follow to stay safe online:

  • Do not release or post personal information like your complete birth date, address, or phone number. Some people may use your information for shady activities like identify theft.
  • Do not download something from a suspicious link. It could contain a virus, spyware, or other harmful information that could damage your computer and cost a lot of money to clean up or repair.
  • Be careful about what you post and say online. An increasing number of employers are checking what their employees post on Facebook and when researching applicants to their companies. Inappropriate content, like badmouthing an employer or posting racy photos, could cost you a job!

Teens especially should be mindful to maintain control over their online profiles. They should have their profile on high privacy settings to make sure that strangers are not able to see their personal information online. In addition, they must be extra aware of people who could take advantage of them online, and should not meet a stranger who they befriend online. People may not be who they say they are and may be looking for trouble, as in this example of an assault that happened after meeting through a social networking site.

Social networking has a number of amazing benefits, and you shouldn’t have to give them up. But be sure to be careful about the actions you take online, and follow these tips to avoid problems online.