A call from one of our clients requesting advice about the distribution of corporate gift cards prompted us to look into this topic. There is a plethora of companies out there that sell customizable gift cards that can be individualized with photographs or logos as personal or corporate gifts. Each company that we looked at came with a different set of regulations and fees, including everything from per-transaction fees, where the recipient of the gift card’s balance is charged each time the card is used, to dormancy fees (charged during periods of non-use) and expiration dates anywhere from six months to two years and up following the issue date of the card. Some companies will even refund the funds not used on the gift card back to the customer after taking out a commission.
Each state has varying legislation or mandatory disclosures relative to gift cards for consumer protection. An excellent source of information for the regulations in each state can be seen at http://www.consumersunion.org/pub/core_financial_services/003889.html. Some states prohibit the expiration of gift cards and prohibit fees altogether.
One gift card sales company indicated to us that because the bank they use to fund their cards has a national charter, the state regulations do not apply.
Regardless of all of this, the most obvious and prudent thing one can do to protect themselves is to immediately read the terms and conditions on the back of any gift card they receive, and to note the expiration date, if any, as well as the terms of any auxiliary charges or dormancy fees. If for any reason you feel that your card is not being honored when it should be, first contact the issuing agency, followed by state regulatory agencies or consumer complaint forums if necessary.
