[Bryan]

U.S. to Set New Rules for Gift Cards - WSJ.com

By MEENA THIRUVENGADAM

WASHINGTON -- Just in time for the holiday shopping season, the Federal Reserve moved Monday to implement legislation aimed at limiting fees and expiration dates associated with gift cards. The rules the Fed is proposing would prohibit retailers and issuers, such as MasterCard and Visa, from charging fees to consumers who have used their cards in the previous year. They also would limit card issuers to charging no more than one inactivity, dormancy or service fee a month, and require funds linked to cards be usable for at least five years after a card is issued or last funded. The rules, however, wouldn't apply to prepaid cards not marketed or labeled specifically as gift cards or gift certificates. They also won't go into effect in time to attach themselves to gift cards purchased this year. The rules are part of a wider reform of credit-card regulations scheduled to become effective in August 2010.

Write to Meena Thiruvengadam at meena.thiruvengadam@dowjones.com

While I think it is crappy of retailers to charge fees on inactive gift cards, I'm curious how the Federal Reserve has the authority to create new rules that retailers (who are not banks) to follow. I can see if it only applied to Visa/MasterCard Gift Cards that they might have that authority, but WalMart?

[Ridley's Own]

Originally Posted by Bryan

U.S. to Set New Rules for Gift Cards - WSJ.com

While I think it is crappy of retailers to charge fees on inactive gift cards, I'm curious how the Federal Reserve has the authority to create new rules that retailers (who are not banks) to follow. I can see if it only applied to Visa/MasterCard Gift Cards that they might have that authority, but WalMart?

They're issued and run by Visa/MasterCard, iirc. Seems a silly bit of overregulation to me, but hey, no one asked me.

[bobthecockroach]

Because it's not like people can just give cash instead of gift cards. I really wish we could transition from a mindset where we think that if there's a problem, the solution is to regulate, to a mindset where we think that if there's a problem, the solution is to do (or not do) something about it. I think fast food is unhealthy crap unfit for human consumption. That doesn't mean I should call my congressman and get him to pass a law that fast food must meet certain criteria of healthiness. It means I should stop buying the damn fast food. If you don't like gift cards, don't buy them. This is not rocket science. When the issue is something like medicine, where you have little choice but to buy it, sure, regulate. When the issue is something entirely optional and superfluous, grow up and figure it out for yourself. The last thing the government should be doing is regulating superfluous businesses to protect people from their own stupidity. Stupidity (and the pain that results from it) is one of the greatest motivations for change.

[bravesfan007]

Originally Posted by bobthecockroach

Because it's not like people can just give cash instead of gift cards. I really wish we could transition from a mindset where we think that if there's a problem, the solution is to regulate, to a mindset where we think that if there's a problem, the solution is to do (or not do) something about it.....If you don't like gift cards, don't buy them. This is not rocket science. ....

Agreed 100%. I absolutely hate gift cards. I never understood why people bought them. Instead of buying gift cards to somewhere why not just give cash. At least that way you'll have the option of taking the cash to another business that you actually want to spend it at or you can save it. With a gift card the money is tied to that particular store and by not using you are in a sense lending them money. They can take the money they have collected from you and use it interest free until the person you give it to decides to use it, which may be a year or longer.

[Jeffrey]

REGULATION!!!!!!

Finally, I was waiting for someone to curb those terrible gift card fees that are sending lower-income and middle-income families into decline.

[normajean777]

CBC News - Edmonton - Alberta bans expiry dates for gift cards

My province banned expiry dates on gift cards last year. While I generally think most regulation is unneccessary or useless, banning expiry dates on a cash equivalent seems like a common sense thing to do, or what you guys seem to be doing, at least extending the dates, is a nice step ahead as well.

On the other end of the spectrum, they shouldn't have the right to limit how much a credit card company should charge and for what. Credit cards are not a human right, and consumers can get by fine without them (See Dave Ramsey) so it doesn't make sense that the government needs to butt its head in there.

[JerryLove]

Did they perhaps do this because voters complained?

[bobthecockroach]

Originally Posted by JerryLove

Did they perhaps do this because voters complained?

I hesitate to think that any act of the government is based on voters' interests.

[JerryLove]

Originally Posted by bobthecockroach

I hesitate to think that any act of the government is based on voters' interests.

Too true

[bravesfan007]

Originally Posted by normajean777

My province banned expiry dates on gift cards last year. While I generally think most regulation is unneccessary or useless, banning expiry dates on a cash equivalent seems like a common sense thing to do, or what you guys seem to be doing, at least extending the dates, is a nice step ahead as well.

Would this not make the accounting records a mess? After all, gift cards are accounted for as unearned revenue (thus a liability). Should there be no expiration this amount would continue to increase? Why would a company such as Sears that has been in business for years want to include this liability indefinitely on its books? After fifty years, is it really necessary to think that that gift card is going to be redeemed? A large portion of them are lost.

Also, I don't know if I would classify a gift card as a cash equivalent. If I take cash into a convenience store, they'll accept it, if I take a Sears gift card in that same store to purchase my gas, they won't take it. Cash is universally accepted by stores, for the most part, and store gift cards are only valid at a particular store. (This ignores the fact of pre-paid Visa and MasterCard cards though, which should be accepted anywhere those cards are valid.)