Consumer Regulations

The Federal Reserve issued final rules that restrict the fees and expiration dates that apply to gift cards. The rules are intended to protect consumers from certain unexpected costs and require that gift card terms and conditions be clearly stated. The rules go into effect Aug. 22.


Previous JofA articles have focused on accounting issues related to gift cards, including proper accounting treatment of gift card sales ( and the application of state escheat laws to “breakage” (, which is the portion of gift card balances that consumers fail to redeem.


The final rules prohibit dormancy, inactivity and service fees on gift cards unless: (1) the consumer has not used the certificate or card for at least one year; (2) no more than one such fee is charged per month; and (3) the consumer is given clear and conspicuous disclosures about the fees. Expiration dates for funds underlying gift cards must be at least five years after the date of issuance, or five years after the date when funds were last loaded.


The final rule says that a provision pre-empts a state law that is inconsistent with the provision and only to the extent of its inconsistency. The regulation further provides that a state law is not inconsistent with any provision if it is more protective of consumers.


The rules generally cover retail gift cards, which can be used to buy goods or services at a single merchant or affiliated group of merchants, and network-branded gift cards, which are redeemable at any merchant that accepts the card brand.


The final rules, available at, were issued under Regulation E to implement the gift card provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009.


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