Gift cards are safer these days but can still trip you up
November 28, 2013 11:05 PM
Gift cards on display.
By Patricia Sabatini / Pittsburgh Post-Gazette
Nearly 60 percent of Americans are putting gift cards on their wish lists this holiday season, making them the most requested gift for the seventh straight year, according to the National Retail Federation.
Although gift cards have been wildly popular for some time, it wasn’t too long ago that they could be a dicey deal. Then, in 2010, federal regulators stepped in with rules to protect consumers from the major pitfalls by limiting expiration dates and fees.
Even so, that doesn’t mean people still can’t get tripped up.
The new regulations required that gift cards be good for at least five years, and that any money that might be added to the cards later on also be good for that long. The rules also prohibit monthly dormancy, maintenance or other service fees such as charges for adding money to a card, unless the card has been inactive for 12 months or more.
But there are a few cases where the rules don’t apply.
One is when gift cards are given away as a reward or as part of a promotion. For example, a $15 gift card received for purchasing $100 worth of merchandise, or a $25 card for taking a test drive at a car dealer. (On the plus side, any expiration dates or fees must be clearly stated on the card.)
In addition, the rules don’t apply to reloadable prepaid cards that aren’t designed for gift giving and instead typically are used like a checking account or for cash while traveling. Those include popular names such as Green Dot, Approved Card, RushCard and Bluebird from American Express.
Sometimes the distinction between a reloadable gift card and other types of reloadable cards can be confusing, especially when they’re all found in the same store display.
For example, Walmart’s Reloadable Walmart Gift Card would be covered by the federal gift card limits, while the discount retailer’s reloadable Walmart MoneyCard would not.
Anyone buying a gift card also should keep in mind that the rules allow for upfront fees in order to purchase a card.
While retailer cards good at a particular store or chain of stores generally don’t carry upfront fees, the type issued by Visa, MasterCard, Discover and others that can be used wherever that brand is accepted generally do.
For anyone receiving a gift card, even though there are limits on dormancy fees, it’s best to use the card as soon as possible to avoid losing it, forgetting about it or ending up holding a worthless card from a retailer that goes belly up.
If the card issuer offers the service, consumers should register gift cards online so they can be replaced if they are lost or stolen (typically for a fee). Alternatively, write down the card number and customer service number and keep them in a safe place. Also be aware that some retailer cards cannot be replaced if lost or stolen.
While gift cards are showing up most often on people’s wish lists this year, they aren’t the only option likely to generate warm holiday smiles.
The survey by the Washington, D.C.-based retail federation showed clothing and clothing accessories were the second most requested gift, appearing on 51 percent of respondents’ lists, followed by books, CDs, DVDs, videos or video games (43 percent); consumer electronics or computer-related accessories (36 percent); jewelry (23 percent); and home decor (21 percent).
For more on regulations covering gift cards, visit http://www.federalreserve.gov/consumerinfo/wyntk_giftcards.htm.
Patricia Sabatini: email@example.com or 412-263-3066.
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