PRIA, Government Policy, Made Personal

Summary

Most gift cards and prepaid cards may not have regular holding or inactivity fees and generally cannot expire soon. The rule covers three kinds of payment devices: general-use prepaid cards (work at many different sellers or ATMs and can sometimes be reloaded), gift certificates (fixed-value, not reloadable, for one seller or an affiliated group), and store gift cards (like gift certificates but may be reloadable). It also says that for general-use prepaid cards, a one-time setup or issuance fee is not treated as a recurring service fee. Fees for inactivity or for holding a card are allowed only if there has been no use for 12 months, the card clearly says a fee may be charged (how much, how often, and that it is for inactivity), the buyer is told about the fee before purchase, no more than one such fee is charged in any month, and any extra rules made by the Consumer Financial Protection Bureau are followed. Cards that are given as awards or promotions with no money paid are also not covered by the fee ban. Cards may not expire earlier than five years after issuance or the last time money was loaded, and the expiration terms must be clearly shown. The Bureau must write final rules to fill in details, consult the FTC, and issue them by no later than nine months after May 22, 2009.

Title 15, §1693l–1

Commerce and Trade, Source: USLM XML via OLRC

(a)Definitions

In this section, the following definitions shall apply:

(1)Dormancy fee; inactivity charge or fee

The terms “dormancy fee” and “inactivity charge or fee” mean a fee, charge, or penalty for non-use or inactivity of a gift certificate, store gift card, or general-use prepaid card.

(2)General use prepaid card, gift certificate, and store gift card

(A)General-use prepaid card

The term “general-use prepaid card” means a card or other payment code or device issued by any person that is—

(i)redeemable at multiple, unaffiliated merchants or service providers, or automated teller machines;

(ii)issued in a requested amount, whether or not that amount may, at the option of the issuer, be increased in value or reloaded if requested by the holder;

(iii)purchased or loaded on a prepaid basis; and

(iv)honored, upon presentation, by merchants for goods or services, or at automated teller machines.

(B)Gift certificate

The term “gift certificate” means an electronic promise that is—

(i)redeemable at a single merchant or an affiliated group of merchants that share the same name, mark, or logo;

(ii)issued in a specified amount that may not be increased or reloaded;

(iii)purchased on a prepaid basis in exchange for payment; and

(iv)honored upon presentation by such single merchant or affiliated group of merchants for goods or services.

(C)Store gift card

The term “store gift card” means an electronic promise, plastic card, or other payment code or device that is—

(i)redeemable at a single merchant or an affiliated group of merchants that share the same name, mark, or logo;

(ii)issued in a specified amount, whether or not that amount may be increased in value or reloaded at the request of the holder;

(iii)purchased on a prepaid basis in exchange for payment; and

(iv)honored upon presentation by such single merchant or affiliated group of merchants for goods or services.

(D)Exclusions

The terms “general-use prepaid card”, “gift certificate”, and “store gift card” do not include an electronic promise, plastic card, or payment code or device that is—

(i)used solely for telephone services;

(ii)reloadable and not marketed or labeled as a gift card or gift certificate;

(iii)a loyalty, award, or promotional gift card, as defined by the Bureau;

(iv)not marketed to the general public;

(v)issued in paper form only (including for tickets and events); or

(vi)redeemable solely for admission to events or venues at a particular location or group of affiliated locations, which may also include services or goods obtainable—

(I)at the event or venue after admission; or

(II)in conjunction with admission to such events or venues, at specific locations affiliated with and in geographic proximity to the event or venue.

(3)Service fee

(A)In general

The term “service fee” means a periodic fee, charge, or penalty for holding or use of a gift certificate, store gift card, or general-use prepaid card.

(B)Exclusion

With respect to a general-use prepaid card, the term “service fee” does not include a one-time initial issuance fee.

(b)Prohibition on imposition of fees or charges

(1)In general

Except as provided under paragraphs (2) through (4), it shall be unlawful for any person to impose a dormancy fee, an inactivity charge or fee, or a service fee with respect to a gift certificate, store gift card, or general-use prepaid card.

(2)Exceptions

A dormancy fee, inactivity charge or fee, or service fee may be charged with respect to a gift certificate, store gift card, or general-use prepaid card, if—

(A)there has been no activity with respect to the certificate or card in the 12-month period ending on the date on which the charge or fee is imposed;

(B)the disclosure requirements of paragraph (3) have been met;

(C)not more than one fee may be charged in any given month; and

(D)any additional requirements that the Bureau may establish through rulemaking under subsection (d) have been met.

(3)Disclosure requirements

The disclosure requirements of this paragraph are met if—

(A)the gift certificate, store gift card, or general-use prepaid card clearly and conspicuously states—

(i)that a dormancy fee, inactivity charge or fee, or service fee may be charged;

(ii)the amount of such fee or charge;

(iii)how often such fee or charge may be assessed; and

(iv)that such fee or charge may be assessed for inactivity; and

(B)the issuer or vendor of such certificate or card informs the purchaser of such charge or fee before such certificate or card is purchased, regardless of whether the certificate or card is purchased in person, over the Internet, or by telephone.

(4)Exclusion

The prohibition under paragraph (1) shall not apply to any gift certificate—

(A)that is distributed pursuant to an award, loyalty, or promotional program, as defined by the Bureau; and

(B)with respect to which, there is no money or other value exchanged.

(c)Prohibition on sale of gift cards with expiration dates

(1)In general

Except as provided under paragraph (2), it shall be unlawful for any person to sell or issue a gift certificate, store gift card, or general-use prepaid card that is subject to an expiration date.

(2)Exceptions

A gift certificate, store gift card, or general-use prepaid card may contain an expiration date if—

(A)the expiration date is not earlier than 5 years after the date on which the gift certificate was issued, or the date on which card funds were last loaded to a store gift card or general-use prepaid card; and

(B)the terms of expiration are clearly and conspicuously stated.

(d)Additional rulemaking

(1)In general

The Bureau shall—

(A)prescribe regulations to carry out this section, in addition to any other rules or regulations required by this subchapter, including such additional requirements as appropriate relating to the amount of dormancy fees, inactivity charges or fees, or service fees that may be assessed and the amount of remaining value of a gift certificate, store gift card, or general-use prepaid card below which such charges or fees may be assessed; and

(B)shall determine the extent to which the individual definitions and provisions of this subchapter or Regulation E should apply to general-use prepaid cards, gift certificates, and store gift cards.

(2)Consultation

In prescribing regulations under this subsection, the Bureau shall consult with the Federal Trade Commission.

(3)Timing; effective date

The regulations required by this subsection shall be issued in final form not later than 9 months after May 22, 2009.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 915 of Pub. L. 90–321 was renumbered section 916 and is classified to section 1693m of this title.

Amendments

2010—Pub. L. 111–203 substituted “Bureau” for “Board” wherever appearing.

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

Effective Date

Pub. L. 111–24, title IV, § 403, as added by Pub. L. 111–209, § 1, July 27, 2010, 124 Stat. 2254, provided that: “(a) In General.—Except as provided under subsection (b) of this section, this title [enacting this section and amending sections 1693m to 1693r of this title and provisions set out as a note under section 1693 of this title] and the

Amendments

made by this title shall become effective 15 months after the date of enactment of this Act [

May 22, 2009]. “(b) Exception.—“(1) In general.—In the case of a gift certificate, store gift card, or general-use prepaid card that was produced prior to

April 1, 2010, the

Effective Date

of the disclosure requirements described in section 915(b)(3) and (c)(2)(B) of the Electronic Funds [probably should be “Fund”] Transfer Act [15 U.S.C. 1693l–1(b)(3), (c)(2)(B)] shall be

January 31, 2011, provided that an issuer of such a certificate or card shall—“(A) comply with paragraphs (1) and (2) of section 915(b) of such Act [15 U.S.C. 1693l–1(b)(1), (2)]; “(B) consider any such certificate or card for which funds expire to have no expiration date with respect to the underlying funds; “(C) at a consumer’s request, replace such certificate or card that has funds remaining at no cost to the consumer; and “(D) comply with the disclosure requirements of paragraph (2) of this subsection. “(2) Disclosure requirements.—The disclosure requirements of this subsection are met by providing notice to consumers, via in-store signage, messages during customer service calls, Web sites, and general advertising, that—“(A) any such certificate or card for which funds expire shall be deemed to have no expiration date with respect to the underlying funds; “(B) consumers holding such certificate or card shall have a right to a free replacement certificate or card that includes the packaging and materials, typically associated with such a certificate or card; and “(C) any dormancy fee, inactivity fee, or service fee for such certificates or cards that might otherwise be charged shall not be charged if such fees do not comply with section 915 of the Electronic Funds [probably should be “Fund”] Transfer Act [15 U.S.C. 1693l–1]. “(3) Period for disclosure requirements.—The notice requirements in paragraph (2) of this subsection shall continue until

January 31, 2013.” Pub. L. 111–24, title IV, § 403,

May 22, 2009, 123 Stat. 1754, which provided that title IV of Pub. L. 111–24 was to become effective 15 months after

May 22, 2009, was repealed by Pub. L. 111–209, § 1,

July 27, 2010, 124 Stat. 2254.

§1693l–1 General-use Prepaid Cards, Gift Certificates, and Store Gift Cards

Summary

Title 15, §1693l–1

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Amendments

Effective Date

Citations & Metadata