Fed cracks down on gift card abuses

"These new rules will curb the abusive fees and early expiration dates that can drain gift cards of their value before they are ever even used."

You are a wise consumer ;-)

I think it is both intreresting and refreshing that with this Obama administration consumers are beginning to see protections from capitalist gangsters that here-to for didn't matter to other administrations that placed the faith of the gospels in big business

The card are like money, if money never expires why should the card? I had a blockbuster gift card that had expired. I used it anyways. I suggest anyone who has an expired card should try and use it anyways.

why exactly is the fed reserve doing this .... cant congress enforce these rules directly. we know the fed is a little too cozy with bankers, and frankly its the cc ones that are the worst to begin with.

The card are like money, if money never expires why should the card?

Exactly! I've never understood fees or taking away the card. All that means is the store, in essence, stole my money! These do not cost the store any money.....why should they charge me fees?

Wouldn't it be easier for the consumer to buy the card at the place of business? I do understand that it is easier to buy the card at Walgreens or Walmart, but I find it just as easy to purchase the cards (and I buy about 40 at Christmas time) at the bookstore for the kids. Also when I go to a restaurant, I go to there to buy my boss a gift certificate for his present.

Wouldn't it be easier for the consumer to buy the card at the place of business?

Not always. In the Borders Books example, my nearest Borders is 3 hours away. I can walk into my local drugstore, however, and buy a Borders gift card to send to my niece who lives 20 minutes from a Borders. Of course I could just send her cash....

You can buy the cards at the store on line...just as easy...

I forget about buying online, but it is easier for me to go to the bookstore and get it there for the kids. Plus, I enjoy taking the kids there to spend it. They get a kick out of it.

Well said! Actually, I couldn`t agree more with you. They are more worried with their profit than protect us from abuses.

So you are okay with giving money to someone for goods and services and through deception and fine print they can give you less than what was paid for.

I'm okay with doing research before I buy something, and not expecting the government to save me from my own stupidity.

This stuff has been so well publicized that anyone who isn't already aware of it must be spending all their time watching reality shows or something.

It's always fun playing a game when one side makes all the rules.

I think you are assuming that all gift cards contain the disclosures.

This stuff has been so well publicized that anyone who isn't already aware of it must be spending all their time watching reality shows or something.

Lol! So true. Just like they are probably watching reality shows while they are foreclosing on the house they couldn't afford in the first place, and the repo man is towing away the BMW they bought with a home equity loan on the house.

Or just like they were watching reality shows when they found that Big Tobacco was actually adding nicotine to their cigarettes to make them more addictive.

Here's an idea for a new reality show. Let's call it: "I'm an idiot that makes $45k per year, and purchased a $500,000 home, took out an equity loan for $100k, bought a new car and elective surgery for my wife, and now that the toxic loan I took out has ballooned, I am broke and going into foreclosure. But, thanks to BHO, it won't affect my credit, and I will be in the same basic standing as someone who purchased a home at a reasonable price per their income and lived within their means. I voted for Obama because he promised to help poor, irresponsible, naiive, delusional idiots like me."

how hard is it to ask about the rules first?

Very.

Why do you think we had to have US Senator work on rules for this.

From the seed :

The Fed received more than 230 letters weighing in on its proposal first unveiled in November

From the avalalche of response to this far-reaching legislation, this is a much-awaited piece of legislation sure to change the lives of thousands of families across the nation.

With a nation sinking in debt and grappling with a high rate of unemployment, this is exactly the kind of work our Senators need to be doing.

But the joke will be on us when New Yorkers will once again re-elect Chuck U Schumer .....

We shouldn't be passing all these laws to protect people from their own stupidity. The consumer should read the information on the back of the card before buying it and if he chooses not to, that's his fault. And every Christmas there are a gazillion articles about this all over the web and newspapers.

We shouldn't be passing all these laws to protect people from their own stupidity.

Are you also opposed to motorcycle helmet laws and automobile seatbelt laws as well, since they protect us from our own stupidity? Should a business be able to bury any number of terms and conditions so deeply in the small print that only someone with a law degree might see it? Is it reasonable to expect someone to stand there in the checkout lane and read all of the terms and conditions prior to making a purchase or to expect a store clerk making $8 an hour to be able to verbally explain all of those terms and conditions to a customer upon request?

I'm not against helmet and seatbelt laws. I know people who have gotten into accidents by not wearing seatbelts (granted, this was back when cars had bench seats up front) and sliding out from behind the wheel while doing donuts, which endangers others. And people's injuries are much worse when they don't wear seatbelts and helmets, and once they've maxed out their insurance, I have to pay for their medical care. So those things affect others, not just the ones who are stupid.

I don't view gift cards to be in that same category - and as I mentioned, this has been incredibly well publicized over the last few years.

The thing is, not every single card will come with a fee or say "check website for more details." A friend and I just went through the situation where the gift card's value fell. In her case, she got a gift card to Panera Bread and used it a few months later. They had started to take money from the gift card and said that there was a fee. There was nothing on the card that said this and the clerk who gave the card in the first place never mentioned any type of fees (some clerks will do this) or to check a website for more details.

For me, I had won a contest and received a Border's bookstore giftcard for $50.00. By the time I found a Border's (by me, it's only Barnes & Noble) a few months later, I only had $13.00 on the card. Nowhere did it say anything about a fee.

And there are some gift cards that don't have fees. I have one for a few years now (just can't get to the store or haven't found what I liked yet) and it still has the same amount.

While, yes, it has been well publicized over the last few years, it has also become quite a game with businesses over the last few years. They take my money, but offer my recipient little in return. Does not seem fair.

I think people should take responsibility for their actions period. When I buy something I either know what I'm buying or I'm prepared to take the loss of not knowing. I don't think somebody else needs to protect me, that simply raises transaction costs for no benefit.

So would I read 50 pages of small print detailing how I could use a $10 gift card? No, I wouldn't buy a gift card with 50 pages of small print. For that matter I'm not in a habit of converting cash to less liquid devices of only equal or lessor value - meaning I see little to no benefit in buying a gift card in the first place.

Legislation of this sort is not required. If a card has a face value of $20 and $5 per month fee, and a $10 use fee then it's already a form of fraud and deceptive advertising - both already illegal. If we really need to better fund anti-fraud efforts then sure make that case but don't make up new laws with no benefit only overhead.

The thing is Kyle, sometimes there isn't any indication that there would be a fee on the card or from the clerk. I have asked clerks if there is a fee on the card and if they say no, then I don't have a problem. If they say yes, I ask more about it to find out about a time limit, etc. I do have a problem when I go to use that card and find out that a fee was taken out even though the clerk told me there weren't any fees and/or there was nothing on the card that mentioned a fee/time limit.

Materially misrepresenting products or services you sell is fraud. A clerk who sells you a card claiming there is no fee when indeed there is a fee committed fraud and that is already illegal. A few chain stores getting prosecuted for not training their employees correctly and/or selling cards with difficult to understand fee schedules would fix this whole 'problem'.

Kyle, then will the Fed be involved in the fraud that you and I mentioned? Because that is what bothers me if nothing is being done.

Most types of fraud are prosecuted at the state level. I don't think the FED runs anti-fraud operations but there are various federal level fraud laws. I think the various states AGs are more than capable of doing something should they wish.

Since the Fed Reserve is involved in lots of serious misrepresentation about all kinds of things (fractional reserve banking, bank solvency, trading, etc) gift cards would be a minor incursion for them.

Secondly, rarely if ever are corporations charged with fraud. If misrepresentation was treated the same by companies as individuals, most corporation would face daily prosecution - for example, how about when the price of a good is different than what the bar code scans? Is that fraud? How about when you notice it, make them give you the "right price" - do they immediate fix it on the computers? No likely - so everyone who doesn't catch it and pays $1 more is not being defrauded? Is this a crime? Well not according to law enforcement ..... but if you do the same thing to a store (intentionally change the bar code for a lower price - Fraud!)

What the Fed does is not fraud, it's simply more complex than most people have the time to figure out, or desire. That doesn't make it a good system, just saying it's not intentionally criminal like some would have us believe.

Material misrepresentation with intent is always fraud. What scenarios you describe either are not material or are not intentional hence the lack of charges. If you for instance picked up a random product and went to check out and the bar code was misapplied giving you an unintentional discount you would not be guilty of fraud. If a company advertises a product at $5 and only will sell it when you show up for $10 then that's fraud.

It's rare but once upon a time some car dealerships ran afoul of game playing along those lines. It's a grey area when they have one item at that price and the rest are higher priced, if they do not disclose it's for a 'limited quantity' then it's fraud but really how often do you not see that disclaimer anymore? That's why it's there.

Actually, the Fed and banks who represent their money as valuable consideration when they just create it on an accounting ledger is fraud. Why do you think no one knows how it works? If people knew that when you bank lent you that 500k for the loan , they just created the money out of thin air and then expected you to pay it back with interest (there was of course no cost to them), was that ever represented to you when you borrowed the money? So in effect, they create money (which they have no legal actual authority to do) and lend it to you at cost. If I did that it would be fraud. Now, there is nothing in the Fed Reserve act which authorizes them to allow their banks to do this, or exempts them from fraud charges..... so obviously they just choose not to charge them. Since the Fed is a conspirator and participant in the Fraud .....

The key to fraud, as you note, is intent. If I go into a store, and knowingly get a product for less than what I should pay, technically I am committing fraud - I knew it cost 10, but I let them charge me 5. Now if a store is notified of an error in what they are charging, and does not fix the error immediately, that constitutes intent ..... the next person who pays extra is being intentionally defrauded.

PS just because they are not charged does not mean they are not guilty ....

The government needed to find something to do, between trying to regulate the college football playoffs and making sure we all have high speed internet paid for with other people's money.

I agree. They must all sit up at night manufacturing problems to legislate. What next, I wonder? How about some legislation that says Drivers License centers MUST take as many photos as necessary to get you the picture you want - and we'll subsidize the cost with tax dollars

Our badging office has a sign that says, "if you want a better picture, bring a better face."

Great LOL!

Have you ever put something away and forgotten about it? Sometimes, I tuck them in my wallet and have just forgotten. Or after a harrowing trip with the kids through the store, just put it out of my mind.

Forget them for years? Not a good excuse, sorry

LS, my mom went through that a year ago. She found 3 gift cards (I think they were for Target) from prior years that she had forgotten about as she had changed purses/wallets. She had received them as gifts from friends. All 3 still had the full amount on them. Awesome.

Have you ever put something away and forgotten about it? Sometimes, I tuck them in my wallet and have just forgotten.

The most common situation, from which retailers profit greatly, is when the cardholder doesn't use the entire value of the card with the purchase. Let's say you have a $50 gift card that you received for Borders (since that store was used previously) but your purchase only added up to $47.34 including tax. Unless you happen to remember that the card still has $2.66 left on it months later when you go back to Borders, that $2.66 ends up being totally free money for the store, for which they did not have to give you any merchandise or provide you with any service in exchange.

Checkmate...that's a reason I'll buy giftcards from Target. No fees!

And, yes, kjm, it can happen for over a year! It's happened before; it'll happen again.

And as Division pointed out...that's what retailers hope for...I forgot! Therefore they get free money!

There are also websites where you can exchange giftcards or sell them for a certain percentage of the value (say, an iTunes card with $50 for $40 cash).

DeFex,

we have a saying in my family "nothing says i love you like cash". :)

I am not opposed to regulation of this type, it's crap that they expire, but where does the regulation end? I would like to see a better ballance between consumer responsibility and regulation. It's getting beyond rediculous the number of new laws passed to protect us from ourselves.

In some cases, personal responsibility needs to be addressed before more legislature.

No, it is not cash-for-credit. A credit arrangement would imply that the business is going to provide you with goods or service today in exchange for payment at some future time. Instead, with a gift card, you are giving the business payment today in return for goods or service at some future time. They have already collected the money and have not provided the customer with any product or service. The customer has provided the business with free money and the business hasn't provided anything but a promise of being able to receive whatever the business sells on some future date.

You're kidding, right???? If you buy a gift card, and they do the processing, is it so ridiculous to assume you're going to use it? If you dont why is it their problem? Think of it as a tax - I give the federal government my tax dollars and don't get enough in return - but that's ok - they give it to someone else, just like you're giving your gift card to someone else who may or may not get to use it.

Al 616

And the people in this camp call themselves Christians? Shame on you.

I'm seeing today...especially today, that Christianity is being hijacked as a cover for sanctioning lying, cheating stealing, abusing, hating and a lot of other forms of immorality. These are truely wolves in sheeps clothing

Did any of us say we were Christians? Maybe I'm a pastafarian. And I never said the company has the right to bilk someone - I said that we have a responsibility to understand what we're buying and stop expecting the government to save us from our own stupidity. Next thing you'll want the government to ban sodas because they make people fat, instead of expecting people to have the personal responsibility to not drink things that are bad for them (or, if they do, not to whine when they get fat).

So you think that people should be allowed to be taken advantage of by companies and given less than what they paid for and if they can't figure it out, it's their own damned fault, but because you don't speak korean or thai , you should be protected by the Government ? You realize how hypocritical that sounds ?

You want to patronize a nail salon run by Koreans or taiwanese *shrug* Buy Rosetta Stone and Learn the languages. That is THEIR business, they pay for it. Why should they convert their business model (which works for them) to suit you ?

You walked into their store, and in doing so you've accepted their terms and agreements , including that if you can't speak the language that the store uses, then they can't be held responsibl.e if you don't get what you want done. You should've read the fine print. You're saying that you need protection from the Government because you can't take the time to learn the language ?

That's the exact same argument you made, and it's just as fallible.

Gift cards are 'gifts' meaning they're usually removed from the paper, and inserted into a gift card and given to someone else. Now that being said, the paper that comes with said gift card oftentimes doesn't fit into that paper.

So let's say you give your 8 year old granddaughter a $20 gift card to ... I don't know ... target. Only there's not a target nearby, it shut down recently. The nearest one is 3 hours away. So it's up to the parents to take time out of their day to transport their daughter so she can redeem her gift card. Say it doesn't get done in 6 months, no fault of the kids. By your argument, the parents should know better than to preoccupy themselves with things like work and chores, and redeemed the child's gift card.

So let's look at the underwriting of a gift card. Say - Borders.

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You understand that your account information on the Site is controlled by you, through the User IDs and Passwords that you selected. You are responsible for protecting the confidentiality of those User IDs and Passwords. Borders and Cardways is entitled to rely on the fact that any Scanned Data, orders for Products or other information sent to this Site under your User ID and Password for this Site were sent by you. If you believe that the confidentiality of any of your User IDs and/or Passwords has been compromised or that someone has accessed your account without authorization, you should contact Borders immediately.

9. Applicable Law.

These Terms will be governed by and construed in accordance with the laws of the State of Michigan, without giving effect to any principles of conflicts of laws. Any action seeking legal or equitable relief arising out of or relating to this Site will be brought only in the courts of the State of Michigan or the United States District Court for the Eastern District of Michigan. A printed version of these Terms of Service will be admissible in judicial and administrative proceedings based upon or relating to these Terms to the same extent and subject to the same conditions as other business documents and records originally generated and maintained in printed form.

10. Return Address and Costs.

Cardways will automatically print a return address on every Product that you print and mail using this Site. The default return address is the address supplied by you for your profile. All costs and taxes are quoted in U.S. dollars. You must pay all applicable taxes on purchases made on this Site. Borders may in its sole discretion add, delete or change some or all of the prices of products and services at any time without notice, other than as set forth on this Site.

11. Miscellaneous.

For purposes of these Terms, "you" and "your" shall mean you and "we", "us," and "our" means Borders and its affiliates. Title and risk of loss for products purchased by you through this Site passes to you upon delivery of the products to our carrier or Cardways' carrier for shipment to you. We may assign our rights and responsibilities hereunder without notice to you. If any of these Terms are held invalid or unenforceable, then the invalid or unenforceable provision will be deemed superseded by a valid, enforceable provision most closely matching the intent of the original provision and the remainder of the Terms will continue in effect. We reserve the right to amend or modify these Terms or impose new conditions at any time. Such amendments and modifications will be effective immediately upon giving you notice by any means including, but not limited to, posting on this Site. These Terms constitute the entire agreement between you and us with respect to the subject matter hereof and supersede all other communications, written or oral, with regard to this Site.

The failure of Borders or Cardways to enforce any right or provision in these Terms shall not constitute a waiver of such right or provision unless acknowledged and agreed to in writing by Borders or Cardways, as applicable. Your use of this Site, however, is subject to the additional disclaimers and caveats that may appear throughout the Borders's website(s).

(end quote)

You REALLY expect a teenage child (the most common recipient of gift cards) to read that and conclude "Holy crap, I need to use this now. But how? I don't live anywhere near this store"

Come on now. You can't want protection for you because YOU lack one type of knowledge , but screw everyone else because they lack knowledge that you possess...well, I guess you could, but that's a pretty crappy viewpoint to take.

Whew!

Not all gift cards contained the necessary information to inform the purchaser on the package. The information was sometimes contained inside or elswhere (ie go to our website). Why is it such a problem to have a law that forces disclosure to the buyer?

Why do we need a new law for every damned thing that should be just plain old common sense?

I thought you said you couldn't continue with this seed. Ah well. The point I made is that there are many gift cards where the rules aren't published on the outside of the package. So the buyer had no way of knowing what the rules were.