Wednesday, July 14, 2010

Congress Extends Transition Deadline for Gift Card Rules

/PRNewswire/ -- The Network Branded Prepaid Card Association (NBPCA) applauds Congress for passing H.R. 5502, the ECO-Gift CARD Act, which will avoid the needless destruction of over 100 million plastic cards and ensure consumer access to these popular gifts during the busy holiday shopping season. The act extends the August 22nd gift card implementation deadline, as mandated by Federal Reserve regulations pursuant to the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act, to Jan. 31, 2011. This would allow the industry to sell existing gift cards, gift certificates, store gift cards and general-use prepaid cards produced prior to April 1, 2010, provided they comply with new rules regarding five year expiration of funds, conspicuous disclosures and fees.

"We want to praise members of Congress for recognizing the critical need for this legislation and voting in favor of its passage. This is a win-win for the environment, retailers, industry and most importantly consumers," said Kirsten Trusko, NBPCA President and Executive Director. "The ECO-Gift Card Act makes no change to the CARD Act rules, it simply keeps gift cards on the shelves for consumers this holiday season by not requiring the destruction and replacement of existing gift card inventory. It also avoids disruption to consumers and retailers during the busiest shopping season of the year when 90% of all gift card sales occur. NBPCA fully supports the new gift card rules, which many of our members have already implemented," added Trusko.

The ECO-Gift Card Act or HR 5502 sponsored by Reps. Dan Maffei (D-NY), Carolyn Maloney (D-NY), Carolyn McCarthy (D-NY), Mike McMahon (D-NY), Gregory Meeks (D-NY) and Kevin McCarthy (R- CA) was introduced in the House on June 10, 2010 and passed unanimously 357-0 on June 14th. Senators Jon Tester (D-MT), Evan Bayh (D-IN), Michael Bennet (D-CO), David Vitter (R-LA), Kay Hagan (D-NC), Kristen Gillibrand (D-NY) and Mike Crapo (R-ID) worked diligently to gain support for the bill, which was passed in the Senate July 13, 2010 by unanimous consent.

During the six month transition period and beyond, card issuers must notify consumers of their rights through in store signage, customer service numbers, websites, general press and advertising. Millions of consumers, businesses and governments use prepaid cards every day because they are a convenient, economical and secure payment tool.

The ECO-Gift Card makes no change to the CARD Act. Consumers who purchase old gift card stock currently in stores during the transition period will receive the full benefits of the new rules. NBPCA fully supports these new regulations, some of which include:

-- No service fees such as ATM or reload fees can be charged until one
year after inactivity and then only one fee per month may be charged.
-- Gift cards will have expiration dates of 5 years from the last load.
-- Free replacement cards must be provided or issuers can give the
remaining balance to the cardholder.
-- Disclosure requirements must be made on the cards including fees,
expiration date, toll free number and website where consumers can get
-- Pre-disclosures regarding fees and expirations must be disclosed prior
to purchase and may not be changed after purchase.

NBPCA remains committed to supporting a regulatory framework where there are fewer, not more, barriers preventing consumers from accessing sound financial services products which best meet their individual needs. The prepaid card industry continues to experience exponential growth across all channels from gift cards and payroll cards to health and general purpose reloadable cards because consumers remain highly satisfied with the products, their ease of use and affordability.

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