This time of year giving gift cards has become a popular choice. An estimated twenty five billion dollars is expected to be spent on gift cards this holiday season alone. However, there are traps for the unsuspecting consumer.
Dormant gift card charges are just another of the many ways in which consumers get ripped off by big businesses year after year. It has been so easy for companies like Visa, MasterCard, and large store chains to rip off consumers with the fees and charges they assess against dormant gift cards. After all, no one calls you up and reminds you that your card is going to start losing two dollars every month because you have been saving the card for a good cause or you simply forgot about it. No one tells you that you have held onto that gift card for one month too many and the monthly charges are going to start whittling away at the balance of that gift card. It almost feels like sneaky theft by night- silent and unseen in the dark.
It isn't until you go to use that gift card that you suddenly discover that the card's balance has dwindled to a much smaller amount than the original balance or disappeared completely. What a rip off! Is it really your fault though? The company that issued the card will tell you that it is your fault without even a sympathetic edge in the customer service rep's voice. Nonetheless, you still feel ripped off.
For far too long, the companies that have been offering gift cards as an easy alternative to credit card use or a nice alternative to cash for gift-giving purposes have gotten away with this practice for all too long. They trick consumers into a relaxed frame of mind about the gift cards by suggesting they are as good as cash. Well, cash lasts forever doesn't it? Wrong! When cash comes in the form of gift cards, all too often, consumers have had only a year or two at the most during which to use the gift cards.
This problem does not affect all consumers since many of them use their gift cards right away. However, for those consumers who have been the unfortunate recipients of branded gift cards for stores they rarely frequent, charges and fees typically chop away at the cash balance.
For years, gift card issuers have gotten away with this practice simply because they could. They even list a notice relating to the charges on the paperwork that accompanies the card or on the card itself. However, the problem with this type of small print is that no one actually reads it until it is too late.
Well, starting in August of 2010, the Credit Card Accountability, Responsibility, and Disclosure Act is about to change some of that. This act, also known as the Card Act, incorporates a few safeguards relating to gift cards along with the protections that it applies to credit cards.
One of the most important changes that the Card Act puts into place is that gift cards cannot expire for at least five years from their issuance or since the gift card was lasted loaded with money. Plus, the expiration date must be disclosed to the consumer. All fees and charges must also be disclosed to the consumer up front. Although dormancy fees will soon end, consumers will be hit with others fees attached to gift cards. Of course, some gift cards are going to be exempt from the new regulations, but this is to be expected in a world where special exemptions are common place. Paper gift certificates, award gift cards, loyalty gift cards, promotional gift cards, and re-loadable gift cards that are marketed as prepaid MasterCard or Visa cards are all exempt from the new regulation. So, until August 2010, watch out for those dormant gift card fees and use your gift cards before you lose their value.
For an array of tips to prevent falling into gift card traps see the Federal Trade Commission's Consumer Alert; Buying, Giving and Using Gift Cards.
Dormant gift card charges are just another of the many ways in which consumers get ripped off by big businesses year after year. It has been so easy for companies like Visa, MasterCard, and large store chains to rip off consumers with the fees and charges they assess against dormant gift cards. After all, no one calls you up and reminds you that your card is going to start losing two dollars every month because you have been saving the card for a good cause or you simply forgot about it. No one tells you that you have held onto that gift card for one month too many and the monthly charges are going to start whittling away at the balance of that gift card. It almost feels like sneaky theft by night- silent and unseen in the dark.
It isn't until you go to use that gift card that you suddenly discover that the card's balance has dwindled to a much smaller amount than the original balance or disappeared completely. What a rip off! Is it really your fault though? The company that issued the card will tell you that it is your fault without even a sympathetic edge in the customer service rep's voice. Nonetheless, you still feel ripped off.
For far too long, the companies that have been offering gift cards as an easy alternative to credit card use or a nice alternative to cash for gift-giving purposes have gotten away with this practice for all too long. They trick consumers into a relaxed frame of mind about the gift cards by suggesting they are as good as cash. Well, cash lasts forever doesn't it? Wrong! When cash comes in the form of gift cards, all too often, consumers have had only a year or two at the most during which to use the gift cards.
This problem does not affect all consumers since many of them use their gift cards right away. However, for those consumers who have been the unfortunate recipients of branded gift cards for stores they rarely frequent, charges and fees typically chop away at the cash balance.
For years, gift card issuers have gotten away with this practice simply because they could. They even list a notice relating to the charges on the paperwork that accompanies the card or on the card itself. However, the problem with this type of small print is that no one actually reads it until it is too late.
Well, starting in August of 2010, the Credit Card Accountability, Responsibility, and Disclosure Act is about to change some of that. This act, also known as the Card Act, incorporates a few safeguards relating to gift cards along with the protections that it applies to credit cards.
One of the most important changes that the Card Act puts into place is that gift cards cannot expire for at least five years from their issuance or since the gift card was lasted loaded with money. Plus, the expiration date must be disclosed to the consumer. All fees and charges must also be disclosed to the consumer up front. Although dormancy fees will soon end, consumers will be hit with others fees attached to gift cards. Of course, some gift cards are going to be exempt from the new regulations, but this is to be expected in a world where special exemptions are common place. Paper gift certificates, award gift cards, loyalty gift cards, promotional gift cards, and re-loadable gift cards that are marketed as prepaid MasterCard or Visa cards are all exempt from the new regulation. So, until August 2010, watch out for those dormant gift card fees and use your gift cards before you lose their value.
For an array of tips to prevent falling into gift card traps see the Federal Trade Commission's Consumer Alert; Buying, Giving and Using Gift Cards.
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