EXTENSION REPORT

Gift Cards

Gift cards have made my busy life a lot easier and I really like to receive gift cards on special occasions, but I have learned recently that giving and receiving gift cards may present some hidden pitfalls.  The Office of the Comptroller (OCC) of the currency has issued guidance on disclosure and marketing issues associated with gift cards to help the consumer make informed decisions about their purchase and use.

The guidance focuses on the need for national banks that issue gift cards to do so in a manner in which both the purchaser and receiver are fully informed of the card’s terms and conditions.  The terms of individual cards can be very different as some recipients find when they try to use them.  Consumers have reported that the cards sometimes lose value or have an expiration date that they were unaware of.

Gift cards present special challenges because disclosure to a purchaser may not be adequate for a gift card recipient.  The OCC expects national banks that issue gift cards not only to inform purchasers about material terms and conditions, but to take appropriate steps so that critical information is likely to be available to recipients as well.

Basic information that is most essential to a gift card recipient’s decisions about when     and how to use the card should be provided on the card itself, or on a sticker or tape that can be affixed to the card.  Disclosures should generally tell consumers:

The expiration date of the card (which should appear on the front of the card);

The existence and the amount of any monthly maintenance, dormancy, usage or similar fees:

How to obtain additional information about the card or other customer service (for example, by providing a toll free number or website address).

In addition, since the user is generally not the person who purchased the product, issuers should provide information for recipients and encourage purchasers to pass it on.  These disclosures could be carried in promotional packaging or inserted into an accompanying sleeve and include such information as the name of the issuing bank, any fees that may apply and what to do if the card is lost or stolen.

The OCC’s new guidance also advises national banks to avoid practices that could be misleading to consumers.  For example, issuers should not advertise a gift card with “no expiration date” if monthly service or maintenance fees, dormancy fees or similar charges can consume the value of the card.  Similarly, if fees may decrease the card balance before the stated expiration date, disclosures related to that expiration date should clearly explain that possibility.  Issuers should also avoid describing gift cards as if they were gift certificates or other payment instruments more familiar to consumers, or as products that carry federal deposit insurance.

The Office of the Comptroller of the Currency was created by Congress to charter national banks, to oversee a nationwide system of banking institutions, and to assure that national banks are safe and sound, competitive and profitable, and capable of serving in the best possible manner to meet the needs of their customers.  The full text of this guidance can be found on the news release page of the OCC’s website:

There is a wealth of good information for the consumer on this website.

If you have questions, please call me at (251) 654-4490 (cell) or at the Baldwin County Extension Office at (251) 937-7176.

Email address: gmusson@aces.edu
Phone: 937-7176 or 943-5611, 928-0860, ext. 2222

Issued in furtherance of Cooperative Extension work in agriculture and home economics, Acts of May 8 and June 30, 1914, and other related acts, in cooperation with the U.S. Department of Agriculture. The Alabama Cooperative Extension System (Alabama A&M University and Auburn University) offers educational programs, materials, and equal opportunity employment to all people without regard to race, color, national origin, religion, sex, age, veteran status, or disability.