It may only be mid-March, but retailers and restaurant operators that are reaping the benefits of offering gift cards must look five months ahead to August 22. That’s the “effective date” of new gift card rules introduced by the Federal Reserve Board in conjunction with the credit card reform law enacted in 2009.

The new rules forbid merchants from charging dormancy fees for an unused gift card unless the card has been unused for at least 12 months. They also limit merchants to charging one dormancy/inactivity fee per card per month, and issuers’ policies on dormancy fees must be prominently displayed—for example, on packaging.

In addition, by the deadline, disclosures of all dormancy fees and other service charges associated with gift cards and gift certificates must specify the exact amount of each as well as how frequently it will be subtracted from the balance (for example, a $2 dormancy fee every month).  Merchants cannot wait to tell customers about these disclosures until after the fact; this information must be shared before the consumer buys the card or certificate–regardless of whether it is purchased at the store or restaurant, over the Internet or by telephone. Many of the gift cards currently on the market have packaging that contains or covers important consumer disclosures.

Finally, gift cards cannot expire for at least five years after they were last loaded with money—unless the full value has been spent. Merchants may want to set the expiration date of each card they sell for five years from the purchase date, or use prominent disclosures that point consumers toward their replacement cards. The rules prohibit “the imposition of any fees for replacing an expired certificate or card to ensure that consumers are able to access the underlying funds for the full five-year period.

“To learn more about the gift card programs in our POS software, visit www.pcamerica.com.