Gift Card Restrictions Summarized

The Credit Card Accountability, Responsibility and Disclosure Act enacted last year imposed new restrictions on gift cards that are designed to make them more consumer-friendly, reports USA Today.

Under the CARD Act, gift cards sold after Aug. 22, 2010, can't expire in less than five years. The law also bars issuers from charging an inactivity fee unless the card has been dormant for at least 12 months. In the past, some gift card issuers deducted inactivity fees after just 30 days. Issuers are also barred from charging a fee to replace a lost or stolen card.

While the Act offers some relief to gift card recipients, the purchasers may still have to pay purchase fees to the issuers, typically ranging from $3.95 to $6.95 per card for general issue cards (although most retailers and restaurants don't charge a fee for their own gift cards and may even offer an incentive to the buyer).

The CARD Act mandates that all gift card issuers must provide specific information on the back of their cards, including fees, expiration dates and a toll-free number by January 31, 2011. Had the date been any earlier, "the gift card industry would have been forced to destroy more than 100 million gift cards," notes USAToday, since it takes about six months to produce gift cards, making it impossible for card manufacturers to fill retailers' orders in time for the holidays.

The CARD Act doesn't include any provisions protecting gift card holders if the issuer goes bankrupt. Anb the  restrictions on expiration dates and fees don't apply to rebate, loyalty or promotional cards, or to paper gift cards and gift certificates.