WASHINGTON - The Federal Reserve Board announced earlier this week a proposal to restrict the fees and expiration dates applicable to retail gift cards (used to buy goods or services at a single retailer or group of retailers) and network-branded gift cards, the Electronic Transactions Association reports.

In December 2009, NACS filed comments with the Federal Reserve expressing concerns with a number of issues:

1. How the new federal minimum five-year expiration restriction interacts with state escheat laws that require surrender of unused prepared card funds in less than five years.
2. The extent of retailer liability for fee disclosure and expiration date compliance, and how the regulations will affect those retailers who only accept gift cards but do not themselves issue them.
3. How the transition to the new rules will affect gift cards that are in a retailer??s inventory at the time the regulations take effect
4. What types of programs will ultimately be given exceptions to the rule ?" for example, are payment codes issued for carwashes subject to the rule or treated differently?

NACS will be analyzing the final rule for its ultimate effect on convenience stores and will be issuing a compliance document in the near future.

At this time, reports confirm that the final rule restricts service fees, dormancy, and inactivity on gift cards unless:

1. A card has been inactive for at least one year;
2. Only one fee is assessed each month; and
3. The consumer is provided unambiguous disclosures about the fees.

Expiration dates for funds would then be five years after the date of issuance or five years after when funds were last loaded. NACS will evaluate carefully how these provisions, and others in the rule, address the concerns we expressed in December.

The reserve board issued the rules under Regulation E (Electronic Fund Transfers), the gift card provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009. The final rules become effective August 22, 2010.