What should I consider before purchasing a gift card?

Every year billions of dollars in gift cards go unused. Make sure you use the gift cards you receive. If purchasing them for someone else, you want to be reasonably certain that the recipient will use them as well.

Prior to purchasing the card, you should read the product disclosures to understand the important terms and conditions of the account.

Key issues to consider are:

  • Any fees that apply during or after the sale that reduce the value of the card;
  • What to do if the card is lost or stolen;
  • What to do if there are problems with the card;
  • Where the card can be used; and
  • How to claim any unused portion of the card.

For gift cards sold on or after August 22, 2010, new rules apply that will restrict many fees and require that all fees be disclosed on the gift card itself or with its packaging. If the gift card has an expiration date, the date must be at least five years after the gift card was issued.

However, for gift cards that were produced before April 1, 2010, the disclosure rules only go into effect on January 31, 2011, as long as the issuer makes certain other disclosures on in-store signs, messages during customer service calls, websites, and general advertising explaining that:

  • The funds underlying the gift card do not expire;
  • Consumers have the right to receive a free replacement card, along with the packaging and materials that typically accompany the gift card; and
  • The issuer will charge dormancy, inactivity, or service fees only if the fee is permitted by the gift card rule.