Final Amendments to Reg E on Gift Cards, Gift Certificates, Prepaid Cards

Final Amendments to Reg E on Gift Cards, Gift Certificates, Prepaid Cards

I. Generally

On March 23, 2010, the Board of Governors of the Federal Reserve System (the "Board") issued a Final Rule amending Regulation E, 12 C.F.R. pt. 205 (the "Final Rule"), published at
75 Fed. Reg. 16580 (Apr. 1, 2010). The Final Rule implements provisions of the Credit Card Accountability Responsibility and Disclosure Act ("Credit CARD Act" or "the Act") [111 P.L. 24; 123 Stat. 1734-1766 (111th Cong., 1st Sess., May 22, 2009)] concerning store gift cards, gift certificates, and general-use prepaid cards. Regulation E generally implements the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. §§ 1693 et seq. The Final Rule becomes effective on August 22, 2010.

The Credit CARD Act and the Final Rule restrict or prohibit the imposition of dormancy and service fees on payment devices covered by the Act. They also prohibit or limit the use of expiration dates with respect to covered payment devices, and impose new disclosure requirements when they are issued to consumers.

II. Types of Payment Products Covered by the Final Rule

The Final Rule applies to certain kinds of stored value products that are defined in EFTA § 915, added by § 401 of the Credit CARD Act, and in a new § 205.20 added to Regulation E, 12 C.F.R. pt. 205, by the Final Rule. These products include gift certificates, gift cards, and general-use prepaid cards...

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III. Types of Payment Products Excluded from the Final Rule

The Act and Final Rule exclude several types of products...

  • Phone cards, defined as cards used "solely for telephone purposes"...
  • Reloadable cards that are not marketed or labeled as gift cards or gift certificates.
  • Loyalty, award, and promotional gift cards...
  • Devices not marketed to the general public.
  • Devices issued in paper form only...
  • Cards redeemable solely at specific events or venues or a group of related locations...

IV. Requirements under the Final Rule Regarding Covered Payment Products

A. Dormancy, Inactivity, and Service Fees


Dormancy, inactivity and service fees are prohibited unless: (1) the card or certificate has been inactive for at least one year before the fee is imposed; (2) the card or certificate clearly and conspicuously discloses the fee, its amount, and the frequency with which it may be imposed; and (3) no more than one such fee may be imposed in a calendar month....

B. Expiration Dates

Expiration dates of less than five years are prohibited...

C. Fees Other than Dormancy, Inactivity, and Service Fees

Fees other than dormancy, inactivity and service fees must be disclosed on the card or certificate...

D. Clear, Conspicuous Disclosures

All required disclosures must be clear, conspicuous, and readily understandable...

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