Friday, November 12, 2010

Not All Gift Cards are Created Equal (Updated)

From Tulsa World.

" surveyed 54 gift cards, including 46 from major retailers and restaurants, and eight network-branded cards. It covered both types of gift cards: "closed loop" (usable at single retailer or chain outlets) and "open loop" (network-branded cards: Visa, Discover, etc.). Network-branded cards are usable at any store accepting their brand.

Open and closed: Most retailer (closed-loop) cards have few fees and don't expire. Closed-loop cards tend not to expire or have fees, according to the Retail Gift Card Association. The same cannot be said for open-loop cards; they usually come with fees at and after purchase. The eight open-loop cards surveyed all charged purchase fees at points of sale and carried expiration dates.

Six of the eight open-loop cards had expiration dates. American Express and Discover had "valid-thru" dates, past which available funds remained valid, so they were not counted as having expiration dates. Their holders had only to request replacement cards for them after their valid-through dates had passed.

New gift card rules: Aug. 22, new gift card rules took effect under the Credit Card Accountability, Responsibility and Disclosure Act (the "Credit CARD Act") of 2009. This requires card funds remain valid for five years from loading dates.

Deadline extended: The Network Branded Prepaid Card Association estimated more than 100 million gift cards in existing stock would have to be destroyed as they do not have the required disclosures printed on them. New legislation extends the deadline to produce cards bearing the disclosures. Expiration information, if applicable, has to be on the card or "communicated through other methods" specified by the ECO-Gift CARD Act extending the deadline for on-the-card disclosures to Jan. 31, 2011.

Inactivity fees: The CARD Act does allow card issuers to assess inactivity fees after at least 12 months of inactivity. Most retailer cards don't impose inactivity fees, and only one card charged a $1.20 monthly fee after 24 months of nonuse.

The choice: Store cards can be redeemed at fewer places but don't have expiration or surprise fees. General-purpose cards are redeemable at many retailers but likely to have balances depleted by fees when not used up the first year. Recipients not living close to the stores the cards are for should be given cards for stores offering free shipping or e-card options. Half of surveyed store cards offer e-cards. Some e-cards allow recipients to shop only online, however. Most surveyed cards allow users to check card balances online, a convenient feature for recipients who don't spend their entire balances at once.

Just one in eight network-branded cards don't permit online balance checks."

UPDATE: Thieves "Stripping" Gift Cards Before Consumers Even Get Them

You think you're buying a good card, only to find it's already been activated and used while it's still on the rack (or before you get it from the online source).


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