August 30, 2010 | last updated March 25, 2012 3:20 am

New Federal Rules Regulate Gift Cards

According to the National Retail Federation, the nationwide trade group for retailers, an estimated 77 percent of shoppers buy a gift card during the holiday season, representing about $23.6 billion in sales across the country.

But of those surveyed, about one in five said they're worried about the expiration dates and fees associated with gift cards.

They will not have to worry any more.

The Federal Reserve System has instituted new rules for retailers, banks and other financial institutions that sell gift cards requiring that the cards do not expire for at least five years. The rules also eliminate inactivity fees and transaction fees, and limit other charges retailers and banks can place on cards.

Plastic Payment

Kelly McFalls, a spokesperson for BJ's Wholesale Club Inc., based in Natick, said the company already complies with the Massachusetts state law, which requires a seven-year expiration date window, so no changes will be needed for that company.

A spokesman for Framingham-based TJX Cos. said the company has historically not charged fees for its gift cards or had any expiration dates, so it too is already in compliance with the regulation.

Craig Shearman, a spokesperson with the NRF, said while most retailers already comply with the expiration date rules, it could have a bigger impact on bank-issued or third-party-issued gift cards.

He also said that the requirement that all gift cards have expiration and fee information printed on them will impact all retailers. That rule was set to go into effect in August, but the deadline has been pushed by until 2011.

Along with new rules for retailers, the Fed has also instituted new rules regarding fees for late payments on credit-card bills. New regulations mandate that banks and credit card issuers cannot charge a penalty fee that is more than the minimum payment on the card, and a bank fee cannot be more than $25 for a late fee, unless the bank receives permission from the Fed.

These regulations are just the latest in a slew of new regulations that have come on board in recent years, said Jon Skarin, director of federal regulatory and legislative policy for the Massachusetts Bankers Association.

"It's been an extremely busy two- to three-year period, between overdraft fee changes, credit card rules, new real estate regulations, mortgage lending disclosures," Skarin said.

"And now that financial reform has been signed into law, we expect dozens and dozens, if not hundreds of additional new regulations that will be written."

For example, the Department of Housing and Urban Development revamped disclosure requirements as part of the Real Estate Settlement Procedures Act last year, which brought wholesale changes to notifications banks must provide to homebuyers, Skarin said.

"It's been a significant challenge to get everyone up and running, from training the staff, to implementing the system," Skarin said.


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