Purchasing a Gift Card? Read This First!
Gift cards make excellent presents, especially during the holidays when you’re unsure of what to buy for a family member or friend. But like everything else, gift cards may have hidden fees and strings attached. It’s important to read the fine print before buying and giving.
In 2010, changes in federal laws improved consumers’ chances of getting full value out of the cards they buy and give. These rules generally apply to gift certificates, store gift cards and general use prepaid cards, which are often branded by payment networks such as Visa or MasterCard. The law states:
- Money on a gift card cannot expire for at least five years from the date the card was purchased, or from the last date any additional money was loaded onto the card. If the expiration date listed on the card is earlier than these dates, the money can be transferred to a replacement card at no cost.
- Inactivity fees can be charged only after a card hasn't been used for at least one year, and you can be charged only once per month. But you may be charged a fee to buy the card or to replace a lost or stolen card.
- The expiration date of a card must be clearly disclosed on the card, and fees must be clearly disclosed on the card or its packaging.
Here are some helpful tips from BBB regarding gift card purchases:
Ø Buy from sources you know and trust. Avoid buying gift cards from online auction sites, because the cards may be counterfeit or may have been obtained fraudulently.
Ø Read the fine print before you buy. Is there a fee to buy the card? If you buy a card by phone or online, are there shipping and handling fees? If you don't like the terms and conditions, buy elsewhere.
Ø See whether any fees will be deducted from the card after you purchase it.
Ø Inspect the card before you buy it. Verify that none of the protective stickers have been removed. Make sure that the codes on the back of the card haven't been scratched off to reveal a PIN number. Report any damaged cards to the store selling the cards.
Ø Give the recipient your original receipt so they can verify the card's purchase in case it is lost or stolen.
Ø Consider the financial condition of the retailer or restaurant. BBB encourages consumers to use gift cards as soon as possible. If the retailer or restaurant goes out of business before the card is redeemed, there will more than likely be no recourse for the card holder.
Despite ongoing issues with gift cards, sales of gift cards are still expected to increase this year. According to a survey by Consumer Reports, 62 percent of consumers are planning to buy gift cards this holiday season.
For more information on U.S. regulations of gift card: www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt010.pdf
For more consumer tips this holiday season in both English and Spanish, visit www.bbb.org.