Credit Card ACT to Regulate Retail Gift Cards

Retailers may have a harder time collecting spare change from the leftover balance of holiday gift cards in 2010, according to consumer advocates. A little known provision in the Credit CARD Act of 2009 places new restrictions on the service fees that card issuers and retailers can charge gift card recipients.

Until recently, gift card merchants could set account maintenance fees as part of an account's terms and conditions. In some cases, merchants could debit between two and five dollars from a gift card for every month the card remained unused. When Consumers Union and other watchdog organizations spotlighted the practice, many retailers reversed or eliminated maintenance fees to build goodwill.

However, since gift cards use the same merchant platform as regular credit card transactions, lawmakers included strict language about gift card fees in the Credit CARD Act. New rules prohibit maintenance or inactivity fees on cards that have been used in the past twelve months. The law also requires card issuers to keep gift accounts open for at least five years. American Express has already announced that it has discontinued maintenance fees on gift cards bearing its logo.