In the spring of 2009, new federal gift card rules (aka the "federal gift card law" or "CARD Act") were signed into law. Ten months later, the Federal Reserve Board (the "Board") issued its much-anticipated "Final Rule," a rule that clarifies and implements the new federal gift card law.
In July of 2010, exceptions to the CARD Act were signed into law, i.e., H.R. 5502 provides a limited extension of the effective date of the CARD Act for gift certificates and cards that were produced prior to April 1, 2010. For a limited subset of gift certificates and cards, the effective date of certain disclosure requirements described in the CARD Act and Final Rule is January 31, 2011. The Board's "Interim Final Rule," issued in August 2010, addresses H.R. 5502 and the status of certain additional requirements adopted by the Board in its Final Rule. The Interim Final Rule also confirms that the effective date of the CARD Act for loyalty, award and promotional card, codes and other devices is August 22, 2010. The CARD Act, Final Rule and Interim Final Rule are effective August 22, 2010.
The new federal gift card law will, in most instances, restrict fees, prohibit expiration in less than five years and impose strict disclosure requirements on prepaid "cards, codes and other devices." In general, the CARD Act covers all prepaid "cards, codes and other devices" that are issued to a consumer on a prepaid basis primarily for personal, family or household purposes, including but not limited to closed-loop and open-loop gift cards, mall cards, other stored-value cards, prepaid products and services, and even broadband and telecom cards, and virtual currency. Moreover, almost all loyalty, award and promotional offers are potentially covered by the CARD Act, unless specific disclosures are made, some of which must be on the face of the offer. It affects virtually all prepaid products regardless of their manner of access. It broadly covers any method of providing the prepaid product, including plastic cards, radio, newspaper, mobile phone, fobs, e-mails, codes, bar codes and account numbers; it is not limited to products issued in card form. Many companies, including retailers, distributors, incentive companies, promotional companies, marketers, manufacturers, telecom companies, virtual worlds, sports and entertainment companies, and others are just learning about the scope and impact of this new law.
In addition, state laws that are more protective than the CARD Act are not preempted. So, applicable state laws that further limit expiration dates or fees or require additional disclosures continue to be effective.
The articles and advisories below offer insight and analysis by attorneys across Pillsbury on the scope and impact of the CARD Act and action steps companies should consider taking immediately. Click on any of the links to open the full document. For more information, please contact Deborah S. Thoren-Peden at firstname.lastname@example.org.