Even in this gloomy economy, gift card sellers have continued to profit significantly—all the while many consumers continue to be ripped off by numerous fees and early expiration dates…

But today, we can mark one for consumers for the victory due to the gift card provisions which are included in the larger credit card bill passed by the Senate providing important credit card protections.

If Congress signs these provisions into law:
• Gift cards—including those branded with Visa/MasterCard/American Express and Discover logos;
• Can’t expire any sooner than 5 years from the last date money was put on the card;
• Fees are banned until after 12 months of inactivity; and,
• One monthly fee may be assessed.

State laws have provided consumers with strong protections on retailer gift cards—a large reason why gift cards from stores like Blockbuster and Macy’s no longer have expiration dates and fees. This biggest change this bill would bring is to also put the brakes on consumers haphazardly losing money on bank gift cards (or those gift cards branded by major card networks).

The bill would also give the Federal Reserve Board authority to:
• Cap the size of the monthly gift card fee;
• Determine when fees may be assessed (i.e. states like California allow fees to be assessed when the balance on the gift card is $5 or less); and
• Determine if gift cards should have protections against fraud or unauthorized use.

Unfortunately, consumers won’t see any benefits with rewards, loyalty, or promotional cards, as well as paper gift cards or paper gift certificates. This means, you still have to watch out for those rebates you get by prepaid card, for instance, those prepaid cards many consumers get from wireless companies.

For additional information on State Gift Card Laws; and the FTC provides tips on gift cards.