Reg E- Gift Cards

Posted By: Getting_Grayer

Reg E- Gift Cards - 12/02/11 05:49 PM

We have an in-house gift card program and have a question concerning charging an inactivity fee on those cards sold between August 22, 2010 and January 31, 2011 – the timeframe of the temporary exemption. The cards sold were on stock produced prior to April 1, 2010 and we complied with all requirements to be able to sell this stock. My issue is we have cards with very low balances, and most likely with no intention of getting re-issued on a new card. We have an inactivity fee in place…can we apply this fee to the cards as is normally allowed in the new regulation?

§205.20(h)(2)(iii) states: Any dormancy, inactivity, or service fee for such certificate or card that might otherwise be charged will not be charged if such fees do not comply with Section 915 of the Electronic Fund Transfer Act. Does this mean that the balance on these cards during this timeframe cannot be charged in effect keeping the balance on the books since the funds cannot expire even though the card can? BTW, section 915 deals with Civil Liability and I cannot see how it applies.

Any help will be appreciated.
Posted By: John Burnett

Re: Reg E- Gift Cards - 12/02/11 07:54 PM

Well, you're right that section 915 used to cover Civil Liability. But §401 of the Credit CARD Act of 2009 renumbered section 915 and all that followed and shoehorned in a new section 915, codified as 15 USC 1693L-1 that has all the gift card changes.

If you made all the disclosures required under section (h) to take advantage of the extension, you can only charge an inactivity fee if it complies with the NEW section 915.
Posted By: Getting_Grayer

Re: Reg E- Gift Cards - 12/04/11 07:20 PM

John,

Thank you for your response.