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WASHINGTON D.C. — Gift cards are big business in the U.S. with approximately $110 billion spent on them this year. However, consumers should remember that they are not the same as cash.
Sen. Richard Blumenthal, D-Conn., is trying to pass a measure called The Gift Card Consumer Protection Act. It would eliminate gift cards with expiration dates, service fees, and inactivity fees -- in which the amount on the card is docked if the card holder doesn't use it within a certain amount of time.
Also under the measure, if a company issues a gift card then goes out of businesses, it would still be required to honor the card.
Sen. Bloomenthal said the bill addresses what he called unfair practices.
"Gift cards should not be the gift that keeps on taking. This measure assures that consumers get their money's worth, no matter when they use the gift card," he stated.
- Bill would completely ban gift cards with expiration dates and non-use fees
- Current law permits expiration of cards after five years, and non-use fees after one year
- Bill would prevent companies that file for bankruptcy from selling gift cards and require them to honor unredeemed gift cards
- Bill would prevent loyalty, promotion, and award cards from expiring
But many companies generally object to the proposal. They said fees are not about profit but help with customer service and fraud protection programs associated with the cards. They contend that removal of the fee could make it economically unfeasible to offer gift cards.
According to TODAY contributor Herb Weisbaum, the Network Branded Prepaid Card Association called the proposed ban on expiration dates and service fees "unworkable restrictions."
The American Bankers Association questions the need for more government regulation in this area.
An ABA spokesman told TODAY companies that issue cards don't get to keep the money if the cards are not used. In many states, after a certain period of time, any unused funds go to the state's unclaimed property office.
One blog also states that it's wrong to assume that retailers don't want gift cards to be redeemed. It said retailers want to keep customers happy, they don't get to keep all the money from unused cards, and they want people to come into their stores because often shoppers will spend more than the amount on the card.
Lawmakers are expected to take up the issue later in 2013.
Contributing: Linda Williams
