Gift cards will once again top the list of holiday gifts in 2012. In 2011, for example, American consumers spent more than $100 billion on gift cards.
A new bill in the Senate is seeking to end all expiration dates, fees and bankruptcy sells on pre-paid gift cards. The Gift Card Consumer Protection Act, sponsored by Senator Richard Blumenthal, D-Conn., is an effort to strengthen current federal regulations of gift card expiration dates and non-use fees. Under current gift card regulations detailed in the Credit CARD Act of 2009, gift cards can expire after five years of activation and non-use fees can be charged once a month after 12 months of dormancy. Blumenthal hopes to ban expiration deadlines and non-use fees altogether under the proposed act and protect consumers from policies that sap gift card value, according to Yale Daily News.
“This bill would expand and enhance the protections beyond what states now guarantee and would also provide a uniform national standard, which is important because many of these companies are national companies,” Blumenthal said in an interview with the News. He added in a statement that gift card companies charge “absolutely draconian deadlines and abusive fees and charges that unfairly confiscate consumer gift card cash.”
The National Retail Federation projects that over 80 percent of shoppers will purchase at least one gift cart this holiday season. In the same survey, 16 percent of consumers said they are less likely to buy gift cards because of concern that the card would expire or have added fees.
The bill would also force companies that file for bankruptcy to stop selling future gift cards and honor cards that remain unredeemed.
Finally, the measure proposes to extend federal protection to loyalty, reward and promotional gift cards, which tend to have much shorter expiration dates.
Blumenthal has been working to end gift card expiration deadlines and non-use fees since he was attorney general for Connecticut.
The National Retail Federation predicts that total gift card spending this holiday season will reach $28.79 billion