Survey Shows Many Consumers Are Unaware Of Gift Card Fees
October 26 2009 - 1:19PM
Dow Jones News
Most U.S. consumers are unaware that some general-purpose gift
cards are subject to monthly fees and can expire, a Consumer
Federation of America survey released Monday found.
General purpose gift cards, most of which are issued by Visa
Inc. (V), MasterCard Inc. (MA) or American Express Co. (AXP), can
be used to make purchases at various retailers. Some of these
cards, about $4 billion worth and growing--can cost $4 to $7. The
gift cards could also have monthly fees as high as $4.95 that are
assessed six to 12 months after the card is purchased.
According to CFA's survey, only 33%, or one-third, of 1004
adults surveyed between Oct. 16-19 knew how much the cards cost.
Fifty-four percent were aware of the potential monthly fees.
In recent years, fees on gift cards have become a thorny issue
for consumers who inadvertently discovered that the value of their
gifts had diminished over time because of monthly maintenance or
inactivity fees or short expiration periods.
To combat this, CFA and the National Association of Consumer
Agency Administrators are launching consumer educational brochures
that contain recommendations for gift card purchasers and
recipients.
The two organizations recommend that gift card purchasers pay
attention to the card's expiration date and charges, while
recipients should use the card's value as soon as possible, within
six months if possible, among other suggestions.
CFA and the association of state and local consumer protection
agencies will distribute the brochures to its members. American
Express has signed on to distribute 1.5 million copies to major
retailers such as those owned by CVS Caremark Corp. (CVS) and
Walgreen Co. (WAG).
In related news, Congress passed the Credit Card Act of 2009 in
May, which generally limits banks and retailers from charging
inactivity or service fees on gift cards unless the card has been
dormant for at least 12 months. The bill also mandates that cards
cannot expire until five years from the purchase date.
Issuers have to start complying with the gift-card regulations
in August 2010.
-By Darrell A. Hughes, Dow Jones Newswires; 202-862-6684;
darrell.hughes@dowjones.com
(Jane J. Kim contributed to this article.)