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Thursday,
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Part II

Federal Reserve
System

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12 CFR Part 205
Electronic Fund Transfers; Final Rule

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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Rules and Regulations

FEDERAL RESERVE SYSTEM
12 CFR Part 205
[Regulation E; Docket No. R–1377]

Electronic Fund Transfers
AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Final rule.
SUMMARY: The Board is amending
Regulation E, which implements the
Electronic Fund Transfer Act, and the
official staff commentary to the
regulation, which interprets the
requirements of Regulation E. The final
rule restricts a person’s ability to impose
dormancy, inactivity, or service fees for
certain prepaid products, primarily gift
cards. The final rule also, among other
things, generally prohibits the sale or
issuance of such products if they have
an expiration date of less than five
years. The amendments implement
statutory requirements set forth in the
Credit Card Accountability
Responsibility and Disclosure Act of
2009.
DATES:

The rule is effective August 22,

2010.
FOR FURTHER INFORMATION CONTACT: Ky
Tran-Trong, Counsel, Vivian Wong or
Dana Miller, Senior Attorneys, or
Mandie Aubrey, Attorney, Division of
Consumer and Community Affairs,
Board of Governors of the Federal
Reserve System, Washington, DC 20551,
at (202) 452–2412 or (202) 452–3667.
For users of Telecommunications
Device for the Deaf (TDD) only, contact
(202) 263–4869.
SUPPLEMENTARY INFORMATION:

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I. Statutory Background
The Electronic Fund Transfer Act (15
U.S.C. 1693 et seq.) (EFTA or Act),
enacted in 1978, provides a basic
framework establishing the rights,
liabilities, and responsibilities of
participants in electronic fund transfer
(EFT) systems. The EFTA is
implemented by the Board’s Regulation
E (12 CFR part 205). Examples of the
types of transactions covered by the
EFTA and Regulation E include
transfers initiated through an automated
teller machine (ATM), point-of-sale
(POS) terminal, automated
clearinghouse (ACH), telephone billpayment plan, or remote banking
service. The Act and regulation provide
for the disclosure of terms and
conditions of an EFT service;
documentation of EFTs by means of
terminal receipts and periodic
statements; limitations on consumer
liability for unauthorized transfers;

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procedures for error resolution; and
certain rights related to preauthorized
EFTs. Further, the Act and regulation
restrict the unsolicited issuance of ATM
cards and other access devices.
The official staff commentary (12 CFR
part 205 (Supp. I)) interprets the
requirements of Regulation E to
facilitate compliance and provides
protection from liability under Sections
916 and 917 of the EFTA (as
redesignated by the Credit Card Act) for
financial institutions and other persons
subject to the Act who act in conformity
with the Board’s commentary
interpretations. 15 U.S.C. 1693n(d)(1).
The commentary is updated
periodically to address significant
questions that arise.
On May 22, 2009, the Credit Card
Accountability Responsibility and
Disclosure Act of 2009 (Credit Card Act)
was signed into law.1 Section 401 of the
Credit Card Act amends the EFTA and
imposes certain restrictions on a
person’s ability to impose dormancy,
inactivity, or service fees with respect to
gift certificates, store gift cards, and
general-use prepaid cards. In addition,
the Credit Card Act generally prohibits
the sale or issuance of such products if
they are subject to an expiration date
earlier than five years from the date of
issuance of a gift certificate or the date
on which funds were last loaded to a
store gift card or general-use prepaid
card.
The Credit Card Act directs the Board
to prescribe rules implementing EFTA
Section 915 within nine months after
enactment. The gift card and related
provisions become effective 15 months
after enactment, or on August 22, 2010.
See EFTA Section 915(d)(3); Section 403
of the Credit Card Act.
II. Background
A gift card is a type of prepaid card
that is designed to be purchased by one
consumer and given to another
consumer as a present or expression of
appreciation or recognition. When
provided in the form of a plastic card,
a user of a gift card is able to access and
spend the value associated with the
device by swiping the card at a POS
terminal, much as a person would use
a debit card. Among the benefits of a gift
card are the ease of purchase for the giftgiver and the recipient’s ability to
choose the item or items ultimately
purchased using the card. According to
one survey, over 95 percent of
Americans have received or purchased
a gift card.2
1 Public

Law 111–24, 123 Stat. 1734 (2009).
Comdata, 2007 Adult Gift Card Study
(available at: http://www.comdata.com/comdata/
2 See

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There are two distinct types of gift
cards: Closed-loop cards and open-loop
cards. Closed-loop gift cards constitute
the majority of the gift card market, both
in terms of the number of cards issued
and the dollar value of the amounts
loaded onto or spent with gift cards.3
These cards generally are accepted or
honored at a single merchant or a group
of affiliated merchants (such as a chain
of book stores or clothing retailers) as
payment for goods or services. They
have limited functionality and generally
can only be used to make purchases at
the merchant or group of merchants.
Closed-loop gift cards are typically
issued by a merchant, or by a card
program sponsor or service provider
working with a merchant, and not by a
financial institution. These cards may
be sold in a predenominated or
consumer-specified amount at the
merchant itself or distributed through
other retail outlets, such as at grocery
stores or drug stores. Generally, closedloop gift cards cannot be reloaded with
additional value after card issuance.
Further, the issuer typically does not
collect any information regarding the
identity of the gift card purchaser or the
recipient.
For merchant-issuers, gift cards have
largely replaced paper-based gift
certificates as a more cost-effective and
efficient means of facilitating gift-giving
by consumers. In addition to reducing
costs associated with the issuance of
paper certificates, electronic gift cards
may also be less vulnerable to fraud or
counterfeiting. Merchants benefit from
the sale of items purchased with gift
cards, as well as from additional
spending by gift card recipients beyond
the face amount on the card. Some
merchants may also derive revenue from
fees, such as from monthly maintenance
or transaction-based fees. Nonetheless,
content/surveys/2007/
adult_gift_card_study_2007.pdf).
3 There are no consensus industry figures about
the overall size of the prepaid card market. See
Rachel Schneider, ‘‘The Industry Forecast for
Prepaid Cards, 2009,’’ Center for Financial Services
Innovation (March 2009) at 4 (available at: http://
www.cfsinnovation.com/research-paperdetail.php?article_id=330539). According to the
Federal Reserve’s 2007 Electronic Payments Study,
$36.6 billion was spent using closed-loop prepaid
cards in 2006, compared to $13.3 billion spent
using open-loop prepaid cards. See 2007 Federal
Reserve Electronic Payments Study 27–42 (March
2008). Industry studies using different
methodologies suggest a larger prepaid card market,
but nonetheless confirm that the closed-loop cards
make up a substantial portion of the market. See,
e.g., Tim Sloane, ‘‘Sixth Annual Closed Loop
Prepaid Market Assessment,’’ Mercator Advisory
Group (October 2009) (estimating that of the $247.7
billion total amount loaded across all prepaid
segments in 2008, 75 percent, or $187.24 billion,
were loaded onto closed-loop cards, including
closed-loop gift cards).

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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Rules and Regulations
cards in some fashion. Most commonly,
state gift card laws may restrict the
circumstances under which dormancy,
inactivity, or service fees may be
charged and/or restrict the
circumstances under which the card or
funds underlying the card may expire.5
Other state laws simply require the
disclosure of fees or expiration dates.
Many states have applied abandoned
property or escheat laws to funds
remaining on gift cards, and some states
require that consumers have the option
of receiving cash back when the
underlying balance falls below a certain
amount. However, while all state gift
card laws address closed-loop gift cards
in some manner, many state gift card
laws do not apply to open-loop bankissued cards.6

most merchant-issued closed-loop gift
cards today do not charge any fees or
carry expiration dates.4
Open-loop gift cards differ in several
respects from closed-loop gift cards.
First, open-loop gift cards typically
carry a card network brand logo (such
as Visa, MasterCard, American Express,
or Discover). Thus, they can be used at
a wide variety of merchants that accept
or honor cards displaying that brand.
Second, open-loop gift cards are
generally issued by financial
institutions. Third, due in part to higher
compliance and consumer service costs,
open-loop gift cards are more likely to
carry fees compared to closed-loop gift
cards, including card issuance and
transaction-based fees. Fourth, openloop gift cards are more likely to offer
the capability of being reloaded with
additional value (reloadable) than are
closed-loop gift cards.
A consumer may obtain gift cards in
several ways. Gift cards can be
purchased at retail locations, by
telephone, or on-line for the purchaser’s
own purposes or received from another
consumer as a gift. In addition, gift
cards can be received through a loyalty,
award, or promotional program. For
example, a merchant may distribute its
own closed-loop gift card to encourage
consumers to visit the store or for
customer retention purposes, such as
through a frequent buyer program.
Merchants and product manufacturers
may also provide gift cards to
consumers as a means of issuing a
rebate for the consumer’s purchase of a
particular product instead of sending
paper rebate checks. Employers may
provide gift cards to their employees as
a reward for good job performance.
Concerns have been raised regarding
the amount of fees associated with gift
cards, the expiration dates of gift cards,
and the adequacy of disclosures.
Consumers who do not use the value of
the card within a short period of time
may be surprised to find that the card
has expired or that dormancy or service
fees have reduced the value of the card.
Even where fees or terms are disclosed
on or with the card, the disclosures may
not be clear and conspicuous.
At the state level, more than 40 states
have enacted laws applicable to gift

Summary of Proposal
In November 2009, the Board
published a proposal to amend
Regulation E and the official staff
commentary to implement the gift card
provisions of the Credit Card Act
(November 2009 Proposed Rule).7 The
proposal applied to gift certificates,
store gift cards, and general-use prepaid
cards, as these terms were defined in the
proposal. The proposal also
implemented statutory exclusions for
certain prepaid products that are not
considered gift certificates, store gift
cards, or general-use prepaid cards
under the rule. The proposed exclusions
applied to, among other things, cards,
codes, or other devices that are
reloadable and not marketed or labeled
as a gift card or gift certificate and
loyalty, award, and promotional gift
cards.
Consistent with the statute, the
proposal would have prohibited any
person from imposing dormancy,
inactivity, or service fees with respect to
gift certificates, store gift cards, and
general-use prepaid cards, unless
certain conditions were satisfied. These
conditions were that: (1) There must be
at least a one-year period of inactivity
with respect to the certificate or card
prior to the imposition of the fee; (2) not
more than one fee may be charged per

4 See, e.g., Montgomery County Office of
Consumer Protection, Gift Card Report 2007
(available at: http://
www.montgomerycountymd.gov/content/ocp/
giftcards2007final.pdf) (reporting that 18 out of 22
closed-loop gift cards surveyed do not impose fees
or carry expiration dates). See also Retail Gift Card
Association, Code of Principles (available at: http://
www.thergca.org/uploads/
Code_of_Principles_PDF.pdf) (recommending the
elimination of dormancy or inactivity fees and of
expiration dates as a best practice).

5 See, e.g., Consumers Union, State Gift Card
Consumer Protection Laws (available at: http://
www.consumersunion.org/pub/
core_financial_services/003889.html); National
Conference of State Legislatures, Gift Cards and Gift
Certificates Statutes and Recent Legislation
(available at: http://www.ncsl.org/programs/
banking/GiftCardsandCerts.htm).
6 See, e.g., Ark. Code section 4–88–704; Cal. Civ.
Code section 1749.45; Fla. Stat. section 501.95; and
Md. Comm. Code Ann. section 14–1320.
7 74 FR 60986 (Nov. 20, 2009).

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III. The Board’s Proposed Revisions to
Regulation E

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month; and (3) disclosures regarding
dormancy, inactivity, or service fees are
stated clearly and conspicuously on the
certificate or card and given prior to
purchase. The Board also proposed to
interpret the term ‘‘service fee’’ to
include any fees that may be imposed
from time to time, which would include
transaction-based fees (such as ATM,
balance inquiry, and card reload fees) as
well as monthly maintenance fees.
The November 2009 Proposed Rule
provided that a gift certificate, store gift
card, or general-use prepaid card may
not be sold or issued unless the
expiration date of the funds underlying
the certificate or card is at least five
years after the date of issuance (in the
case of a gift certificate) or five years
after the date of last load of funds (in the
case of a store gift card or general-use
prepaid card). In addition, the proposal
would have required information
regarding the terms of expiration to be
stated clearly and conspicuously on the
certificate or card and disclosed prior to
purchase.
The November 2009 Proposed Rule
set forth two proposed alternative
approaches regarding the sale of a
certificate or card to minimize potential
confusion for consumers in
circumstances where the expiration date
on a certificate or card and the
expiration date for the underlying funds
differ. The first alternative would have
prohibited the sale or issuance of a
certificate or card that has a printed
expiration date that is less than five
years from the date of purchase. The
second alternative would have
prohibited the sale or issuance of a
certificate or card, unless a person has
policies and procedures in place to
ensure that a consumer has a reasonable
opportunity to purchase a certificate or
card that has an expiration date that is
at least five years from the date of
purchase. In addition, the proposed rule
would have prohibited the imposition of
any fees for replacing an expired
certificate or card where the underlying
funds remained valid, to ensure that
consumers are able to access the
underlying funds for the full five-year
period.
In addition to requiring the disclosure
of dormancy, inactivity, or service fees,
the proposed rule would have required
the disclosure of all other fees imposed
in connection with a gift certificate,
store gift card, or general-use prepaid
card. These disclosures would be
provided on or with the certificate or
card and disclosed prior to purchase.
The proposed rule also would have
required the disclosure on the certificate
or card of a toll-free telephone number
and, if one is maintained, a Web site,

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that a consumer may use to obtain fee
information or replacement certificates
or cards.
Overview of Public Comments
The Board received over 230
comment letters on the proposal. The
majority of the comment letters were
submitted by industry commenters,
including card issuers, card networks,
industry trade associations, retailers,
and prepaid card program managers and
distributors. In addition, letters were
submitted by individual consumers,
consumer groups, a city government
entity, and one state attorney general.
Many individual consumers urged the
Board to prohibit any and all fees in
connection with gift certificates, store
gift cards, and general-use prepaid cards
as well as the expiration of any funds
added to such certificates or cards to
ensure that consumers do not lose any
value on certificates or cards they have
purchased. The state attorney general
commenter and city government entity
commenter asserted that the final rule
should include restrictions on the fees
that may be imposed in connection with
covered certificates or cards as well as
stringent standards regarding the size
and prominence of the prescribed
disclosures. The state attorney general
commenter also encouraged the Board
to include rules to make clear that more
stringent state protections are not
preempted by Federal law.
To minimize the fees that could be
imposed on a gift certificate, store gift
card, and general-use prepaid card,
consumer group commenters urged the
Board to adopt an expansive definition
of ‘‘service fee’’ and to broadly interpret
‘‘activity’’ for purposes of determining
when a consumer’s gift card has been
used. Consumer group commenters also
requested that the Board exercise its
new authority under the Credit Card Act
to set caps on dormancy, inactivity, and
service fees and to set floor amounts
above which fees could not be charged.
Finally, consumer groups asked the
Board to extend EFTA and Regulation E
protections to all prepaid cards,
including general-purpose reloadable
cards that may be used as account
substitutes by the unbanked.
Industry commenters asserted that the
Board should limit its interpretation of
the term ‘‘service fee’’ to monthly
maintenance fees, and thus exempt
activity-based fees, such as per
transaction, ATM, balance inquiry, and
reload fees, from the substantive
restrictions regarding the imposition of
service fees. In addition, industry
commenters expressed concern that
because of space constraints, the broad
definition of ‘‘service fee’’ would make it

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impossible for issuers to comply with
the requirement to disclose all such fees
on the certificate or card itself.
With respect to the expiration date
restrictions, industry commenters
generally supported the Board’s
decision to apply the five-year
expiration date requirement to the
underlying funds, rather than the card
itself. Industry commenters were
divided on the appropriate alternative
approach regarding the sale of
certificates or cards subject to the rule.
However, a slight majority favored the
flexibility afforded by the proposed
alternative approach that would allow
certificates or cards to be sold so long
as the consumer has a reasonable
opportunity to purchase a certificate or
card with at least five years remaining
before expiration.
Industry commenters also expressed
concerns regarding the proposed
guidance regarding the exclusion for
cards, codes, or other devices that are
reloadable and not marketed or labeled
as a gift card or gift certificate. Industry
commenters believed that the Board’s
proposed examples were overly
restrictive in terms of whether and how
general-purpose reloadable cards could
be sold in the same location as gift
cards. Specifically, these commenters
noted that the proposed examples
requiring retailers to use separate
displays for gift cards and excluded
prepaid cards, including generalpurpose reloadable cards, may lead
some retailers to decide to stop selling
general-purpose reloadable cards
altogether. According to these
commenters, this would limit consumer
choice to the detriment of unbanked
consumers who may use generalpurpose reloadable cards as a substitute
for a traditional debit card tied to a
checking or savings account. Industry
commenters also urged the Board to
exclude from the final rule temporary
cards issued in connection with generalpurpose reloadable cards, even if the
temporary card was issued as a nonreloadable card.
Finally, industry commenters urged
the Board to grandfather certificates or
cards sold or issued prior to the
effective date of the final rule of August
22, 2010 from all requirements under
the rule, as well as to provide relief for
certificates or cards that have been
distributed, but not sold, as of August
22, 2010 to avoid significant costs
associated with printing new cards and
replacing old stock.

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IV. Summary of Final Rule
Scope of Rule
The final rule applies to gift
certificates, store gift cards, and generaluse prepaid cards, as those terms are
generally defined in the Credit Card Act,
with certain adjustments to the statutory
definitions for consistency and clarity.
The scope of the final rule is generally
limited to gift certificates, store gift
cards, or general-use prepaid cards sold
or issued to consumers primarily for
personal, family, or household
purposes, consistent with the general
scope of the EFTA and Regulation E.8
Thus, the rule does not apply to cards,
codes, or other devices 9 where the end
use is for business purposes, such as to
pay for business travel expenses or
office supplies. However, the fact that a
person may sell cards, codes, or other
devices to a business does not by itself
exclude the cards, codes, or other
devices from the scope of the rule. Such
cards, codes, or other devices are subject
to the rule if the business purchaser
resells or distributes the cards, codes, or
other devices to consumers primarily for
personal, family, or household
purposes, unless the cards, codes, or
other devices are otherwise excluded
under § 205.20(b).
Restrictions on Dormancy, Inactivity, or
Service Fees
Under the final rule, no person may
impose a dormancy, inactivity, or
service fee with respect to a gift
certificate, store gift card, or general-use
prepaid card, unless three conditions
are satisfied. First, such fees may be
imposed only if there has been no
activity with respect to the certificate or
card within the one-year period prior to
the imposition of the fee. Second, only
one such fee may be assessed in a given
calendar month. Third, disclosures
regarding dormancy, inactivity, or
service fees must be clearly and
conspicuously stated on the certificate
or card, and the person issuing or
selling the certificate or card must
provide these disclosures to the
8 Loyalty, award, and promotional gift cards, as
defined in § 205.20(a)(4) and discussed below, are
subject to certain disclosure requirements under the
final rule, but not to the substantive restrictions on
imposing dormancy, inactivity, or service fees, or
on expiration dates.
9 The final rule and accompanying supplementary
information generally use the term ‘‘certificate or
card’’ to refer to a gift certificate, store gift card, or
general-use prepaid card that is subject to the
requirements under § 205.20. In other places, the
term ‘‘card, code, or other device’’ is generally used
to refer more broadly both to covered certificates or
cards as well as other prepaid products which may
fall outside the rule under an exclusion in
§ 205.20(b).

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purchaser before the certificate or card
is purchased.
As in the proposal, the final rule
includes in the definition of ‘‘service
fee’’ both account maintenance fees that
are charged on a recurring basis as well
as activity-based fees which may occur
from time to time, such as per
transaction, balance inquiry, ATM, and
reload fees.
Expiration Date Restrictions
The final rule provides that a gift
certificate, store gift card, or general-use
prepaid card may not be sold or issued
unless the expiration date of the funds
underlying the certificate or card is no
less than five years after the date of
issuance (in the case of a gift certificate)
or five years after the date of last load
of funds (in the case of a store gift card
or general-use prepaid card). In
addition, information regarding whether
funds underlying a certificate or card
may expire must be clearly and
conspicuously stated on the certificate
or card and disclosed prior to purchase.
Consumers may be confused if the
expiration date on a certificate or card
differs from the expiration date for the
underlying funds. The final rule thus
provides that no person may sell or
issue a certificate or card unless the
person has established policies and
procedures to provide consumers with a
reasonable opportunity to purchase a
certificate or card that has an expiration
date that is at least five years from the
date of purchase. A person who has
established policies and procedures to
prevent the sale of a certificate or card
with less than five years from the date
of purchase also satisfies the
requirement.
The final rule also generally requires
a certificate or card to include a
disclosure alerting consumers to the
difference between the certificate or
card expiration date and the funds
expiration date, if any, and that the
consumer may contact the issuer for a
replacement card. This disclosure must
be stated with equal prominence and in
close proximity to the certificate or card
expiration date. Non-reloadable
certificates or cards that bear an
expiration date on the certificate or card
that is at least seven years from the date
of manufacture need not include this
disclosure, however.
The final rule further prohibits the
imposition of any fees for replacing an
expired certificate or card if the
underlying funds remain valid, to
ensure that consumers are able to access
the underlying funds for the full fiveyear period. The final rule also
provides, however, that in lieu of
sending a replacement certificate or

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card, issuers may remit, without charge,
the remaining balance of funds to the
consumer.

pursuant to a loyalty, award, or
promotional program that begins on or
after August 22, 2010.

Additional Disclosure Requirements
Regarding Fees
In addition to the statutory
restrictions for dormancy, inactivity, or
service fees, the final rule requires the
disclosure of all other fees, such as
initial issuance fees and cash-out fees,
imposed in connection with a gift
certificate, store gift card, or general-use
prepaid card. These disclosures must be
provided on or with the certificate or
card and disclosed prior to purchase.
The final rule also requires disclosure
on the certificate or card of a toll-free
telephone number and, if one is
maintained, a Web site, that a consumer
may use to obtain fee information or
replacement certificates or cards.

V. Legal Authority
Section 401 of the Credit Card Act
creates a new Section 915 of the EFTA.
This provision prohibits any person
from charging dormancy, inactivity, or
service fees with respect to a gift
certificate, store gift card, or general-use
prepaid card, unless there have been at
least 12 months of inactivity with
respect to the certificate or card, not
more than one fee is charged in any
given month, and certain disclosures
regarding such fees are provided to the
consumer. See EFTA Section 915(b); 15
USC 1693m(b). See also § 205.20(d). In
addition, Section 401 of the Credit Card
Act makes it unlawful for any person to
sell or issue a gift certificate, store gift
card, or general-use prepaid card that is
subject to an expiration date, unless the
expiration date is at least five years after
the date on which a gift certificate is
issued or five years after funds are last
loaded on a store gift card or general-use
prepaid card, and the terms of
expiration are clearly and
conspicuously disclosed. See EFTA
Section 915(c); 15 U.S.C. 1693m(c). See
also § 205.20(e).
Section 401(d)(1) of the Credit Card
Act requires the Board to prescribe rules
to carry out the new requirements.
These requirements are implemented in
new § 205.20 in the final rule. Sections
205.20(a) and (b) of the final rule define
the products subject to the new
requirements and implement statutory
exclusions set forth in the Credit Card
Act. The Board has also used the
authority under EFTA Section
915(a)(2)(D)(iii) to adopt certain
disclosure requirements for loyalty,
award, and promotional gift cards in
§ 205.20(a)(4)(iii). See 15 U.S.C.
1693m(a)(2)(D)(iii).
Section 401(d)(1) of the Credit Card
Act gives the Board the authority to
prescribe rules addressing the amount of
dormancy, inactivity, or service fees that
may be imposed, and the balance below
which such fees may be assessed. See
EFTA Section 915(d)(1); 15 U.S.C.
1693m(d)(1). In addition, Section
401(d)(2) of the Credit Card Act requires
the Board to determine the extent to
which the individual definitions and
provisions of the EFTA and Regulation
E should apply to gift certificates, store
gift cards, and general-use prepaid
cards. See EFTA Section 915(d)(2); 15
U.S.C. 1693m(d)(2). The Board has used
this authority under Section 401(d)(2) of
the Credit Card Act to require certain
additional fee-related disclosures for
covered certificates or cards. See

Exclusions
Consistent with the statute, the final
rule excludes certain prepaid products
from the definitions of gift certificate,
store gift card, or general-use prepaid
card. For example, cards, codes, or other
devices that are issued in connection
with a loyalty, award, or promotional
program, or that are reloadable and not
marketed or labeled as a gift card or gift
certificate, are not subject to the
substantive restrictions on imposing
dormancy, inactivity, or service fees, or
on expiration dates. The final rule
provides that the exclusion for cards,
codes, or other devices that are
reloadable and not marketed or labeled
as a gift card or gift certificate applies
also to temporary cards issued solely in
connection with a general-purpose
reloadable card, even if the temporary
card is initially non-reloadable.
To mitigate potential consumer
confusion, the final rule requires a
loyalty, award, or promotional gift card
to state on the front of the card both that
it is issued for loyalty, award, or
promotional purposes as well as any
funds expiration date that may apply. In
addition, all fees, including any
dormancy, inactivity, or service fees,
must be disclosed on or with the
loyalty, award, or promotional gift card.
Mandatory Compliance Date
The mandatory compliance date for
the rule is August 22, 2010 as set forth
in the Credit Card Act. Under the final
rule, certificates or cards sold on or after
August 22, 2010 must fully comply with
the requirements of this section,
including any disclosure requirements
that apply. In addition, loyalty, award,
or promotional gift cards will be subject
to the disclosure requirements
discussed above if they are issued

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§ 205.20(f)(1). Lastly, Section 402 of the
Credit Card Act amends EFTA Section
920 to provide that the EFTA does not
preempt any state laws that address
dormancy, inactivity, or service fees or
expiration dates for gift certificates,
store gift cards, or general-use prepaid
cards if such state laws provide greater
consumer protection than the new gift
card provisions. See § 205.12(b).
In addition to the statutory mandates
set forth in the Credit Card Act, Section
904(a) of the EFTA authorizes the Board
to prescribe regulations necessary to
carry out the purposes of the title. The
express purposes of the EFTA are to
establish ‘‘the rights, liabilities, and
responsibilities of participants in
electronic fund transfer systems’’ and to
provide ‘‘individual consumer rights.’’
See EFTA Section 902(b); 15 U.S.C.
1693. Section 904(c) of the EFTA further
provides that regulations prescribed by
the Board may contain any
classifications, differentiations, or other
provisions, and may provide for such
adjustments or exceptions for any class
of electronic fund transfers that in the
judgment of the Board are necessary or
proper to effectuate the purposes of the
title, to prevent circumvention or
evasion, or to facilitate compliance. The
Board has exercised its authority under
EFTA Sections 904(a) and 904(c) to
adopt additional requirements in
§§ 205.20(c), 205.20(e)(1),
205.20(e)(3)(ii)–(iii), 205.20(e)(4) and
205.20(f)(2), to make conforming
changes to §§ 205.3(a) and 205.4(a)(1),
and where otherwise specifically stated
in the Section-by-Section analysis to
effectuate the purposes of and facilitate
compliance with the EFTA. The
Section-by-Section analysis and Final
Regulatory Flexibility Analysis serve as
the economic impact analysis pursuant
to EFTA Section 904(a)(2).
VI. Section-by-Section Analysis

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Section 205.3

Coverage

3(a) General
Section 205.3(a) is revised to provide
that the new gift card provisions in
§ 205.20 apply to any person. The
revision reflects that the scope of the
Credit Card Act’s gift card provisions is
not limited to financial institutions. For
example, EFTA Section 915(b) prohibits
‘‘any person’’ from imposing a
dormancy, inactivity, or service fee in
connection with a gift certificate, store
gift card, or general-use prepaid card
unless certain conditions are met. See
§ 205.20(d). Similarly, EFTA Section
915(c) generally prohibits ‘‘any person’’
from selling or issuing a gift certificate,
store gift card, or general-use prepaid
card that is subject to an expiration date.

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See § 205.20(e). Thus, § 205.20 applies
to any of the parties in a certificate or
card distribution chain, including but
not limited to a card issuer, a program
manager, and a retailer of prepaid cards,
to the extent they engage in any of the
acts covered by that section with respect
to gift certificates, store gift cards, or
general-use prepaid cards, or to loyalty,
award, or promotional gift cards.
Section 205.4 General Disclosure
Requirements; Jointly Offered Services
Section 205.4 contains the general
disclosure requirements under
Regulation E, including provisions
relating to the form of disclosure.
Section 205.4(a)(1) provides that
disclosures required by the regulation
shall be clear and readily
understandable, in writing, and in a
form that the consumer may keep. The
Board proposed to revise § 205.4(a)(1) to
provide that for certain disclosures
required by the regulation, different
disclosure standards may apply. The
revision to § 205.4(a)(1) is adopted as
proposed.
As revised, § 205.4(a)(1) clarifies that
the requirement that disclosures be clear
and readily understandable, in writing,
and in a form the consumer may keep
is one of general application, and that
different requirements apply when
specified in the rule. For example, as
further discussed below, the disclosures
for certain prepaid cards set forth in the
final rule are subject to a ‘‘clear and
conspicuous’’ standard, consistent with
Section 915 of the EFTA, rather than the
‘‘clear and readily understandable’’
standard that generally applies under
Regulation E. See § 205.20, discussed
below. Similarly, under current
§ 205.11(c), notices provided by
financial institutions to satisfy the error
investigation requirements of Regulation
E may be provided orally or in writing.
See comment 11(c)–1.
Two industry commenters
recommended that the Board revise
§ 205.4(a)(1) to explicitly provide that
the consumer consent provisions of the
Electronic Signatures in Global and
National Commerce Act (the E-Sign Act)
(15 U.S.C. 7001 et seq.) do not apply to
gift card disclosures provided
electronically. Section 205.4(a)(1)
currently provides that disclosures
required by the regulation may be
provided electronically, subject to
compliance with the consumer consent
provisions of the E-Sign Act. The E-Sign
Act consumer consent provisions only
apply when a statute or regulation
provide that the sole means of providing
disclosures is in writing. The Board
believes the current regulation is clear
that a person need not obtain E-Sign

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consent to provide gift card disclosures
electronically because the final rule
permits gift card disclosures to be
provided in writing, orally, or
electronically.10 Thus, the final rule
does not contain the suggested
revisions.
Section 205.12

Relation to Other Laws

EFTA Section 920 (as redesignated by
the Credit Card Act) provides that the
EFTA does not preempt any state laws
relating to electronic fund transfers
except to the extent that such laws are
inconsistent with the EFTA’s
provisions. See 15 U.S.C. 1693r. Section
920 further clarifies that a state law is
not inconsistent with the EFTA if the
state law provides greater protection for
the consumer than under the Act.
Accordingly, Section 920 effectively
creates a federal floor for the protections
set forth in the Act (floor preemption).
Section 205.12(b) of Regulation E
implements this provision.
The Credit Card Act amended EFTA
Section 920 to apply the EFTA’s
existing preemption provisions to state
laws that address ‘‘dormancy fees,
inactivity charges or fees, service fees,
or expiration dates of gift certificates,
store gift cards, or general-use prepaid
cards.’’ See Section 402 of the Credit
Card Act. Thus, state laws that provide
greater protection for consumers than
Title IV of the Credit Card Act as
codified in the EFTA, are not preempted
by the EFTA. The Board proposed to
amend § 205.12(b) of Regulation E and
comment 12(b)–1 to conform with the
amendments to EFTA Section 920 made
by the Credit Card Act. The final rule
amends the regulation and commentary
generally as proposed, with certain
revisions for clarity.
One state attorney general commenter
urged the Board to include additional
rules to clarify that more stringent state
protections are not preempted by federal
law with respect to gift cards. The Board
believes, however, that § 205.12(b)(1)
already is clear that a state law is not
preempted due to inconsistency with
federal law if it is more protective of
consumers.
Industry commenters did not
comment on the Board’s proposed
revisions to § 205.12(b), but raised a
separate issue relating to preemption in
connection with state escheat laws. This
issue is discussed later in the Sectionby-Section analysis.
10 Of course, a person providing gift card
disclosures electronically must continue to satisfy
the requirements under §§ 205.20(c)(3) and (c)(4).

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Section 205.20 Requirements for Gift
Cards and Gift Certificates
20(a) Definitions
EFTA Section 915(a)(2) generally
defines the scope of gift cards and gift
certificates that are subject to the Credit
Card Act’s restrictions on dormancy,
inactivity, or service fees and the terms
of expiration. Specifically, EFTA
Section 915 applies to gift certificates,
store gift cards, and general-use prepaid
cards as those terms are defined in the
statute. In addition, EFTA Section
915(a)(1) defines a dormancy fee,
inactivity charge or fee, and EFTA
Section 915(a)(3) defines a service fee.
See 15 U.S.C. 1693m(a).
Section 205.20(a) of the final rule
defines the following terms: Gift
certificate; store gift card; general-use
prepaid card; loyalty, award, or
promotional gift card; dormancy or
inactivity fee; service fee; and activity.
Comments received regarding the
definitions are generally discussed in
connection with the relevant term
below.
The definitions of gift certificate, store
gift card, and general-use prepaid card
generally track the definitions set forth
in the statute. However, the final rule
makes certain adjustments to the
statutory definitions pursuant to the
Board’s authority under EFTA Section
904(c) to provide clarity and to
harmonize key terms throughout the
rule.

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Card, Code, or Other Device
As discussed in the November 2009
Proposed Rule, EFTA Section 915 does
not use consistent terminology to
describe the payment devices covered
by the statute. For example, the
statutory definition of a general-use
prepaid card refers to a ‘‘card or other
payment code or device,’’ while the
statutory definition of a store gift card
refers to an ‘‘electronic promise, plastic
card, or other payment code or device.’’
Distinguishing the types of products
covered under the rule by, for instance,
the material that is used to produce a
payment card would not be consistent
with the statute’s overall purpose. The
adoption of such distinctions would
result in some gift card products being
excluded from the rule altogether based
on the type of material used to make the
card. For example, if the definition of
store gift card literally required a card
to be made out of plastic, then a
reloadable gift card that was made with
a different material would neither be a

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store gift card nor fall under any of the
other definitions of covered products.11
In addition, the exclusions in EFTA
Section 915(a)(2)(D) apply to an
‘‘electronic promise, plastic card, or
payment code or device’’ that meets
certain specified criteria. See 15 U.S.C.
1693m(a)(2)(D). The Board does not
believe that an issuer that, for example,
chooses to use non-plastic
biodegradable materials to create a more
environmentally-friendly card product
should be precluded from relying on an
exclusion solely because its payment
device is not made of plastic. Therefore,
the proposed rule generally referred to
‘‘cards, codes, or other devices’’ to avoid
such arbitrary distinctions and to
provide consistency across the
definitions. The Board did not receive
any comments on this approach, and the
final rule retains the proposed
terminology.
Proposed comment 20(a)–1 clarified
that the requirements of § 205.20
generally apply to all cards, codes, or
other devices that meet the general
definition of gift certificate, store gift
card, or general-use prepaid card, even
if they are not issued in card form. That
is, the rule applies even if a physical
card or certificate is not issued. The
Board did not receive any comments on
the proposed comment. Accordingly, it
is adopted generally as proposed, with
certain revisions to provide additional
guidance.
Final comment 20(a)–1 clarifies that
§ 205.20 covers products even if they are
not issued in card form, such as account
numbers or bar codes that enable a
consumer to access underlying funds.
Similarly, § 205.20 applies to a device
with a chip or other embedded
mechanism that links the device to
stored funds, such as a mobile phone or
sticker containing a contactless chip
that enables the consumer to access the
stored funds. Section 205.20 also
applies if a merchant issues a code that
entitles a consumer to redeem the code
for goods or services, regardless of the
medium in which the code is issued,
and whether or not it may be redeemed
electronically or in the merchant’s store.
Thus, for example, if a merchant e-mails
a code that a consumer may redeem in
a specified amount either on-line or in
the merchant’s store, that code is
covered under § 205.20, unless one of
the exclusions in § 205.20(b) apply. See
comment 20(a)–1.
The final comment also provides that
a card, code, or other device may meet
the definition of gift certificate, store gift
11 Products issued in paper form only are
excluded under EFTA Section 915(a)(2)(D)(v) and
§ 205.20(b)(5), discussed below.

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card, or general-use prepaid card in
§ 205.20(a)(1) through (3), if it is an
electronic promise, see comment 20(a)–
2, discussed below, as well as a promise
that is not electronic. But see
§ 205.20(b)(5).
Electronic Promise
The term ‘‘electronic promise’’ is used
in several places in the statute to refer
to a type of payment mechanism or
device. See EFTA Sections 915(a)(2)(B),
(a)(2)(C), and (a)(2)(D). As proposed,
comment 20(a)–2 clarified that the term
‘‘electronic promise’’ means ‘‘a person’s
commitment or obligation
communicated or stored in electronic
form made to a consumer to provide
payment for goods or services for
transactions initiated by the
consumer.’’ 12 The proposed comment
reflected the Board’s view that an
electronic promise reflects a person’s
commitment to pay that is itself
represented by a ‘‘card, code, or other
device,’’ rather than a distinct payment
mechanism. Commenters did not
address the proposed comment, and it is
adopted generally as proposed. Thus,
for example, if a merchant issues a code
that can be given as a gift and redeemed
by the recipient in an on-line
transaction for goods or services, that
code represents an electronic promise
by the merchant and is a card, code, or
other device covered by § 205.20. See
comment 20(a)–2.
Specified Amount
The statutory definitions of ‘‘gift
certificate’’ and ‘‘store gift card’’ refer to
products that are ‘‘issued in a specified
amount.’’ In contrast, the statutory
definition of a ‘‘general-use prepaid
card’’ refers to products that are ‘‘issued
in a requested amount.’’ See EFTA
Sections 915(a)(2)(A), (a)(2)(B), and
(a)(2)(C); 15 U.S.C. 1693m(a)(2)(A),
(a)(2)(B), and (a)(2)(C). One possible
interpretation of the statute’s use of
different terms could suggest that gift
certificates and store gift cards issued in
a consumer-requested amount and
general-use prepaid cards issued in a
predenominated (or specified) amount
would be excluded from the rule. The
Board does not believe that such a result
would be consistent with the statute’s
purpose.
Accordingly, to ensure that
consumers receive the same protections
when purchasing gift cards or gift
certificates regardless of whether the
12 See, e.g., UCC 3–103(a)(12) (defining ‘‘promise’’
as a ‘‘written undertaking to pay money signed by
the person undertaking to pay. An acknowledgment
of an obligation by the obligor is not a promise
unless the obligor also undertakes to pay the
obligation.’’).

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amount on the gift card is determined
by the issuer or the consumer, the Board
proposed to interpret the statutory
definitions of gift certificate, store gift
card, and general-use prepaid card
broadly to cover certificates or cards
whether the amounts are
predenominated or consumerdesignated. Therefore, the proposed rule
used the term ‘‘specified’’ consistently
across all three defined product terms to
capture all certificates or cards whether
they are issued in predenominated
amounts or in an amount requested by
a consumer in a particular transaction.
Commenters generally supported the
Board’s proposed reconciliation of the
statutory terms, and the final rule
retains this approach. Two industry
commenters, however, noted that both
the statute and the proposed rule appear
to limit the scope of coverage to
certificates or cards issued with specific
currency denominations (for example, a
$50 gift card or certificate). Accordingly,
these commenters asked the Board to
clarify that the rule does not apply to
gift cards that entitle the cardholder to
a specific ‘‘experience,’’ such as a hotel
stay or a golf lesson, rather than a
monetary value that may be applied
towards goods or services. These
commenters were particularly
concerned that if ‘‘experience’’ cards
were subject to the five-year minimum
expiration requirements, issuers or
sponsors of such cards may have to raise
prices to adjust for anticipated cost
increases over a five-year period for the
specified experience.
The Board agrees that such a
clarification is appropriate in light of
the statutory language referring to
certificates or cards ‘‘issued in a
specified [or requested] amount.’’ This
language suggests that the statute is
intended to cover certificates or cards
that are issued in a specified currency
denomination.
Accordingly, new comment 20(a)–3 is
added to clarify that cards, codes, or
other devices redeemable for a specific
good or service, or ‘‘experience,’’ such as
a spa treatment, hotel stay, or airline
flight, generally are not subject to the
requirements of § 205.20 because they
are not issued to a consumer ‘‘in a
specified amount.’’ Similarly, a card,
code, or other device that entitles the
consumer to a certain percentage off the
purchase of a good or service, such as
a card offering 20% off of any purchase
in a store, is not subject to the
requirements of § 205.20 because it is
not issued to a consumer in a ‘‘specified
amount.’’ Nonetheless, if the card, code,
or other device is issued in a specified
or predenominated amount that can be
applied toward the specific good or

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service, or states a specific monetary
value, such as ‘‘a $50 value,’’ comment
20(a)–3 clarifies that the card, code, or
other device is subject to this section,
unless one of the exceptions in
§ 205.20(b) apply. See, e.g.,
§ 205.20(b)(3).
Personal, Family, or Household
Purposes
Although the EFTA generally applies
only to consumer accounts, the gift card
provisions of the Credit Card Act do not
expressly limit the scope of the new
restrictions to certificates or cards
issued primarily for personal, family, or
household purposes. Accordingly, the
Board solicited comment on whether it
would be appropriate to limit the scope
of the final rule so that it does not apply
to certificates or cards issued for
business purposes. The Board noted,
however, that any such limitation likely
would not exclude certificates or cards
that are purchased by a business for the
purposes of redistribution or resale to
consumers primarily for personal,
family, or household purposes. Given
that the rule could therefore require
issuers to adopt controls and potentially
monitor the distribution or sale of gift
cards to ensure that the end use is for
business purposes, the Board also
solicited comment regarding whether
the rule should cover cards, codes, or
other devices issued for business
purposes.
Industry commenters urged the Board
to exclude certificates or cards issued
for business purposes from the rule,
stating that such an approach would be
consistent with the scope of the EFTA,
which is generally limited to consumerpurpose products. Industry commenters
also noted that the sophistication of
commercial parties in a business-tobusiness transaction alleviated the need
to mandate the protections set forth in
the Credit Card Act for businesspurpose certificates or cards. Consumer
groups did not address the issue.
Industry commenters also asserted
that the final rule should not require
card issuers to adopt controls and
monitor the distribution or sale of gift
cards purchased by a business to ensure
that the end use is for business
purposes. Instead, industry commenters
argued that it should be sufficient for
issuers to rely on contractual provisions
prohibiting the resale or redistribution
of such products to the public. Industry
commenters urged the Board to also
grant a safe harbor from any liability if
a certificate or card was sold or issued
to consumers in violation of contractual
provisions.
The final rule limits the scope of the
rule to cards, codes, or other devices

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issued primarily for personal, family, or
household purposes. Limiting the rule
to cards, codes, or other devices issued
primarily for personal, family, or
household purposes is consistent with
the scope of the EFTA. In addition, the
Board understands that Title IV of the
Credit Card Act was primarily intended
to enable consumers to spend the full
value on their gift cards within a
reasonable time frame without having
that value reduced by associated fees
and expiration dates.13 The Board is not
aware of any similar concerns regarding
business-purpose prepaid certificates or
cards.
New comment 20(a)–4 clarifies that
§ 205.20 only applies to cards, codes, or
other devices that are sold or issued to
consumers primarily for personal,
family, or household purposes. The
comment provides, however, that a
card, code, or other device may
continue to be subject to the rule even
if it is initially purchased by a business,
if the card, code, or other device is
purchased for redistribution or resale to
consumers primarily for personal,
family, or household purposes. In
addition, the new comment provides
that the fact that a card, code, or other
device may be primarily funded by a
business, for example, in the case of
certain rewards or incentive cards, does
not by itself mean that the card, code,
or other device is outside the scope of
§ 205.20, if the card, code, or other
device will be provided to a consumer
primarily for personal, family, or
household purposes. See, however,
§§ 205.20(a)(4) and (b)(3).
New comment 20(a)–4 further states
that whether a card, code, or other
device is issued to a consumer primarily
for personal, family, or household
purposes will depend on the facts and
circumstances. For example, if a
program manager purchases store gift
cards directly from an issuing merchant
and sells those cards through the
program manager’s retail outlets, such
gift cards are subject to the requirements
of § 205.20 because the store gift cards
are sold to consumers primarily for
personal, family, or household
purposes.
In contrast, a card, code, or other
device generally would not be issued to
consumers primarily for personal,
family, or household purposes, and
therefore would fall outside the scope of
§ 205.20, if the purchaser of the card,
code, or device is contractually
13 See, e.g., ‘‘Schumer, Mark Udall Introduce Bill
to Protect Consumers from Hidden Gift Card Fees
Secretly Draining Shoppers’ Pockets’’, Press Release,
Mar. 27, 2009 (available at: http://
schumer.senate.gov/new_website/
record.cfm?id=310799).

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prohibited from reselling or
redistributing the card, code, or device
to consumers primarily for personal,
family, or household purposes, and
reasonable policies and procedures are
maintained to avoid such sale or
distribution for such purposes.
However, if an entity that has purchased
cards, codes, or other devices for
business purposes sells or distributes
such cards, codes, or other devices to
consumers primarily for personal,
family, or household purposes, that
entity does not comply with § 205.20 if
it has not otherwise met the substantive
and disclosure requirements of the rule
or unless an exclusion in § 205.20(b)
applies.
New comment 20(a)–5 provides
examples of cards issued for business
purposes.

emcdonald on DSK2BSOYB1PROD with RULES2

Issued on a Prepaid Basis
The definitions of ‘‘gift certificate,’’
‘‘store gift card,’’ and ‘‘general-use
prepaid card’’ have each been revised in
the final rule to clarify that the card,
code, or other device must be issued on
a ‘‘prepaid basis’’ to meet the particular
definition, consistent with the statute.
See, e.g., EFTA Section 915(a)(2)(A)(iii);
See 15 U.S.C. 1693m(a)(2)(A)(iii). For
purposes of § 205.20, a card, code, or
other device may be issued on a prepaid
basis whether the card, code, or other
device is loaded in advance by a
consumer or by another person.
20(a)(1) Gift Certificate
Section 205.20(a)(1) defines the term
‘‘gift certificate’’ as a card, code, or other
device that is: (a) Issued on a prepaid
basis primarily for personal, family, or
household purposes to a consumer in a
specified amount that may not be
increased or reloaded in exchange for
payment; and (b) redeemable upon
presentation at a single merchant or an
affiliated group of merchants for goods
or services. The definition generally
tracks the definition set forth in the
statute, with modifications to simplify
and clarify the definition. See EFTA
Section 915(a)(2)(B); 15 U.S.C.
1693m(a)(2)(B). The definition is
adopted generally as proposed, except
that, as discussed above, the scope of
the definition is limited to cards, codes,
or other devices issued to a consumer
primarily for personal, family, or
household purposes. In addition, the
definition has been revised for
consistency with the statute to clarify
that the certificate must be issued on a
‘‘prepaid basis.’’
The term ‘‘affiliated group of
merchants’’—as further discussed below
under the definition of ‘‘store gift
card’’—includes two or more merchants

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or other persons that are related by
common ownership or common
corporate control and share the same
name, mark, or logo. The term also
includes two or more merchants or
other persons that agree among
themselves to honor any card, code, or
other device that bears the same name,
mark, or logo (other than the mark or
logo of a payment network) for the
purchase of goods or services solely at
such merchants or persons. See
comment 20(a)(2)–2.
20(a)(2) Store Gift Card
Section 205.20(a)(2) defines the term
‘‘store gift card’’ as a card, code, or other
device that is: (a) Issued on a prepaid
basis primarily for personal, family, or
household purposes to a consumer in a
specified amount, whether or not that
amount may be increased or reloaded,
in exchange for payment; and (b)
redeemable upon presentation at a
single merchant or an affiliated group of
merchants for goods and services. The
definition generally tracks the definition
set forth in the statute, with
modifications to simplify and clarify the
definition. See EFTA Section
915(a)(2)(C); 15 U.S.C. 1693m(a)(2)(C).
The definition is adopted generally as
proposed, except that, as discussed
above, the scope of the definition is
limited to cards, codes, or other devices
issued to a consumer primarily for
personal, family, or household
purposes. In addition, the definition has
been revised for consistency with the
statute to clarify that the card, code, or
other device must be issued on a
‘‘prepaid basis.’’ Under the final rule,
closed-loop cards generally are
considered ‘‘store gift cards’’ or ‘‘gift
certificates,’’ unless one of the
exclusions in § 205.20(b), discussed
below, applies.
A card, code, or other device that
meets the requirements in § 205.20(a)(2)
qualifies as a ‘‘store gift card,’’ whether
or not more funds may be added to the
card, code, or other device. As
proposed, the term ‘‘store gift card’’
included a card, code, or other device
issued in a specified amount, ‘‘whether
or not that amount may be increased or
reloaded by a consumer.’’ The final rule
deletes the reference in proposed
§ 205.20(a)(2)(i) to the increasing or
reloading of a card ‘‘by a consumer’’ to
reflect that the amount on a card may
be increased or reloaded by a person
other than the consumer, such as the
card issuer or a merchant. In addition,
because ‘‘store gift card’’ includes nonreloadable cards, codes, or other devices
that are redeemable at single merchants
or affiliated groups of merchants,
comment 20(a)(2)–1 clarifies and

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illustrates by way of example that a gift
certificate as defined in § 205.20(a)(1) is
a type of store gift card.
Comment 20(a)(2)–2 provides
guidance on the term ‘‘affiliated group of
merchants.’’ Under EFTA Section
915(a)(2), both the definition of ‘‘gift
certificate’’ and ‘‘store gift card’’ refer to
certificates or cards that are redeemable
at a single merchant or ‘‘an affiliated
group of merchants that share the same
name, mark, or logo.’’ The term
‘‘affiliate’’ is not defined in the statute.
The Board proposed to interpret the
term ‘‘affiliate’’ to include both a
relationship between two or more
companies that is defined by some form
of common ownership or common
corporate control by one of the
companies, consistent with the use of
that term in other contexts.14 The
proposed term would also include an
arrangement by which unrelated
companies agree to operate a common
gift card program in which cardholders
may use the same certificate or card at
any of the companies. No comments
were received on the proposed
comment, and it is adopted as proposed.
Accordingly, comment 20(a)(2)–2
provides that the term ‘‘affiliated group
of merchants’’ means two or more
affiliated merchants or other persons
that are related by common ownership
or common corporate control, and that
share the same name, mark, or logo.
Thus, for example, the term covers
franchisees because franchisees
generally are subject to a common
corporate set of policies or practices
under the terms of their franchise
licenses.
Comment 20(a)(2)–2 also provides
that the term ‘‘affiliated group of
merchants’’ includes arrangements
under which two or more merchants or
other persons that agree among
themselves, by contract or otherwise, to
redeem cards, codes, or other devices
bearing the same name, mark, or logo for
purchases of goods or services solely at
the establishments of such merchants or
persons. See also comment 20(a)(3)–2
regarding mall cards, discussed below.
For example, a movie theater chain and
a restaurant chain may decide to operate
a gift card program that enables
cardholders to use the same gift card to
pay for movie tickets or concessions at
the theater, or for a meal at the
restaurant. The Board believes that it is
appropriate to treat such arrangements
like gift card programs operated by
retailers with the same parent company
14 See, e.g., 12 CFR 222.3(b) (defining ‘‘affiliate’’
under the Board’s Regulation V (Fair Credit
Reporting)); 12 CFR 223.2 (defining ‘‘affiliate’’ under
the Board’s Regulation W (Transactions Between
Member Banks and Their Affiliates)).

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or under common corporate control.
Comment 20(a)(2)–2 clarifies, however,
that merchants or other persons are not
considered affiliated merely because
they agree to accept a card that bears the
mark, logo, or brand of a payment
network. Thus, for example, a grocery
store is not considered to be affiliated
with a hardware store merely because
they both agree to accept Visa or
MasterCard-branded cards.
Comment 20(a)(2)–3 addresses mall
cards and cross-references comment
20(a)(3)–2, discussed below.
20(a)(3) General-Use Prepaid Card
Section 205.20(a)(3) defines the term
‘‘general-use prepaid card’’ as a card,
code, or other device that is: (a) Issued
on a prepaid basis primarily for
personal, family, or household purposes
to a consumer in a specified amount,
whether or not that amount may be
increased or reloaded, in exchange for
payment; and (b) redeemable upon
presentation at multiple, unaffiliated
merchants or service providers for goods
or services, or usable at ATMs. The
definition generally tracks the definition
in the statute, with modifications to
simplify and clarify the definition. See
EFTA Section 915(a)(2)(A); 15 U.S.C.
1693m(a)(2)(A). Under the final rule,
open-loop cards generally are
considered to be ‘‘general-use prepaid
cards,’’ unless one of the exclusions in
§ 205.20(b), discussed below, applies.
The definition is adopted generally as
proposed, except that, as discussed
above, the scope of the definition is
limited to cards, codes, or other devices
issued to a consumer primarily for
personal, family, or household
purposes. In addition, consistent with
the revision to the definition of ‘‘store
gift card,’’ the definition of ‘‘general-use
prepaid card’’ is revised to delete the
reference in proposed § 205.20(a)(3)(i) to
increasing or reloading of a card ‘‘by a
consumer’’ to reflect that the amount on
a card may be increased or reloaded by
a person other than the consumer, such
as the card issuer or a merchant. The
definition has also been revised for
consistency with the statute to clarify
that the card, code, or other device must
be issued on a ‘‘prepaid basis.’’
Comment 20(a)(3)–1 clarifies that a
card, code, or other device is
‘‘redeemable upon presentation at
multiple, unaffiliated merchants’’ if, for
example, the merchants agree to honor
the card, code, or device if it bears the
mark, logo, or brand of a payment
network, pursuant to the rules of the
payment network.
One popular form of gift card is a mall
gift card, which is intended to be used
or redeemed at participating retailers

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located within the same shopping mall.
In some cases, however, the mall card
may also be network-branded, which
permits the card to be used at any
retailer that accepts that card brand,
including retailers located outside the
mall. Proposed comment 20(a)(3)–2
generally stated that whether a mall
card is considered a store gift card or a
general-use prepaid card depends on the
locations in which the card may be
redeemed. For example, if the use of the
mall card is limited to the retailers
located within the shopping mall, the
card would be more likely to be
considered a store gift card. In contrast,
if the mall card was network-branded
and could be used at any merchant that
accepted that brand, the card would be
considered a general-use prepaid card.
One industry commenter argued that
a mall gift card should be considered a
‘‘general-use prepaid card’’ even if it
does not carry a network brand. This
commenter noted that mall cards are
generally issued by a financial
institution or member of a card network,
and not by the mall or program sponsor,
and that transactions using the mall
card are authorized and settled over the
payment networks just like other
general-use prepaid cards. The
commenter also stated that cards issued
in connection with other forms of
limited open-loop programs that are
intended to encourage local residents to
support the participating merchants
within a community should similarly be
viewed as ‘‘general-use prepaid cards’’
because such cards are generally bankissued and carry similar costs as more
traditional network-branded cards.
Comment 20(a)(3)–2 is adopted
substantively as proposed. The Board
does not believe that the fact that the
entity issuing a particular card is a bank
should be dispositive of whether the
card is a general-use prepaid card.
Instead, consistent with the statute, the
determination turns on the degree of
affiliation between the merchants
honoring the card for goods or services.
In general, a card, code, or other device
is more likely to be considered to be a
general-use prepaid card if the
merchants honoring the card have no
contractual relationship or agreement to
redeem the card, code or other device
except for the fact that they agree to
honor any card, code, or other device
carrying the brand of a payment
network. See comments 20(a)(2)–2,
20(a)(3)–1. Nonetheless, the substantive
and disclosure requirements of § 205.20
apply to mall cards whether they are
considered store gift cards or generaluse prepaid cards.

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20(a)(4) Loyalty, Award, or Promotional
Gift Card
EFTA Section 915(a)(2)(D)(iii)
excludes an electronic promise, plastic
card, or payment code or device from
the definitions of ‘‘gift certificate,’’ ‘‘store
gift card,’’ or ‘‘general-use prepaid card’’
if it is a loyalty, award or promotional
gift card, as such term is defined by the
Board. See also § 205.20(b)(3).
Proposed § 205.20(a)(4) generally
defined the term ‘‘loyalty, award, or
promotional gift card’’ as a card, code,
or other device that: (a) Is issued in
connection with a loyalty, award, or
promotional program; (b) is redeemable
upon presentation at one or more
merchants for goods or services, or
usable at ATMs; and (c) provides certain
disclosures about any fees and
expiration dates that may apply to the
card, code, or other device. Proposed
§ 205.20(b)(3), discussed below,
implemented the exclusion for loyalty,
award, or promotional gift cards. The
final rule adopts the proposed definition
of loyalty, award, or promotional gift
card in § 205.20(a)(4), substantially as
proposed, but modifies the disclosure
requirements, as discussed below. In
addition, the scope of the definition is
limited to cards, codes, or other devices
issued on a prepaid basis primarily to a
consumer for personal, family, or
household purposes.
In contrast to gift cards purchased at
a store, loyalty, award, and promotional
gift cards typically are not funded
through direct payment from the
consumer, but instead are funded by the
entity sponsoring the card program,
such as a merchant, an employer, or a
company. Cards issued through such
programs may serve as cost-effective
substitutes for traditional means of
distributing funds through a promotion,
such as rebate checks, vouchers, or cash
awards.
Much like rebate checks, vouchers,
and cash awards, gift cards distributed
through a loyalty, award, or promotional
program are typically redeemable for a
limited period of time. Loyalty, award,
or promotional gift cards thus generally
carry shorter expiration dates compared
to gift cards purchased by consumers
through retail channels.
Consumers who receive a gift card
redeemable at one merchant as part of
a loyalty, award, or promotional
program may be surprised to find that
the fees and expiration date on the card
differ significantly from the fees and
expiration date on a substantially
similar card that they may have
purchased directly from that same
merchant. Improved disclosure of these
terms for cards subject to the exclusion

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may help reduce consumer surprise or
confusion.
The November 2009 Proposed Rule
did not impose substantive restrictions
on dormancy, inactivity, or service fees,
or on expiration dates, with respect to
loyalty, award, or promotional gift
cards. To address potential consumer
surprise or confusion, the Board
proposed to impose additional
disclosure requirements for loyalty,
award, or promotional gift cards in
§ 205.20(a)(4)(iii). Specifically, in order
to be deemed a ‘‘loyalty, award, or
promotional gift card,’’ and therefore
qualify for the proposed exclusion in
§ 205.20(b)(3), the proposed rule would
have required that the card, code, or
other device set forth disclosures
regarding any fees and expiration dates
that may apply. While disclosures
regarding dormancy, inactivity, or
service fees, expiration dates, and a tollfree number and Web site for additional
information would have been required
to be on the card, code, or other device,
disclosures regarding other fees could
accompany the card, code, or other
device.15
Industry commenters generally agreed
that disclosures regarding the fees and
expiration dates associated with a
loyalty, award, or promotional gift card
were appropriate. However, many
industry commenters urged the Board to
provide flexibility in how those
disclosures could be provided. In
particular, industry commenters urged
the Board to permit such disclosures to
be provided in accompanying terms and
conditions or on a sticker affixed to the
card, rather than mandate that the
disclosures appear on the card itself.
A few industry commenters, however,
believed that the proposed disclosures
contravened Congressional intent to
exclude loyalty, award, or promotional
cards from all requirements of the gift
card provisions of the Credit Card Act,
including the disclosure requirements.
These industry commenters also
expressed concern that if loyalty, award,
or promotional cards were required to
carry the same or similar disclosures as
those required for gift certificates, store
gift cards, and general-purpose prepaid
cards, consumers would be less able to
15 Proposed § 205.20(a)(4)(iii) would have
required a loyalty, award, or promotional card to set
forth, among other things, ‘‘the disclosures specified
in paragraphs (d)(2), (e)(2), and (f)(2) of this
section.’’ Due to a scrivener’s error, the proposal
cross-referenced paragraph (e)(2) of the rule, rather
than paragraph (e)(3) as was intended. In response
to commenters’ suggestions, however, the final rule
states the specific disclosures that are applicable to
loyalty, award, or promotional gift cards in
§ 205.20(a)(4)(iii) for clarity, instead of crossreferencing other disclosure requirements
elsewhere in the rule.

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clearly differentiate between the
different prepaid products. Moreover,
these industry commenters stated that
in light of the proposed definition of
‘‘service fee’’ to broadly include fees
other than monthly maintenance fees,
requiring that such fees be stated on the
card would effectively limit issuers’
ability to charge such fees due to the
space limitations on a card.
Some retailers that offer closed-loop
gift cards may use the same card design
for the gift cards they sell to the general
public and cards that they sell at a
discount to businesses for distribution
as rewards. Likewise, card providers
that offer program development and
card fulfillment services for reward,
promotional, or incentive card programs
may offer standardized card designs to
their corporate clients. The ability to
standardize card designs enables
businesses to attain cost savings when
ordering a large volume of the same card
design, and enhances the ability of the
card provider to quickly produce cards
to fulfill prepaid card orders. However,
the standardization of card designs may
also lead to consumer confusion
because cards that otherwise appear to
be the same may carry terms and
conditions, including fees and
expiration terms, that vary to a
significant degree. Accordingly, the
Board continues to believe that clear
and conspicuous disclosures regarding
the terms and conditions that may apply
to loyalty, award, or promotional gift
cards are necessary to help consumers
avoid surprise from unexpected
dormancy, inactivity, or service fees or
from short expiration dates.
Based upon comments received and
further analysis, the Board, pursuant to
its authority under EFTA Section
915(a)(2)(D)(iii) to define ‘‘loyalty,
award, or promotional gift card,’’ is
revising the disclosure requirements
that must be met in order for a card,
code, or other device to meet the
definition of a ‘‘loyalty, award, or
promotional gift card.’’
Specifically, the final rule in
§ 205.20(a)(4)(iii)(A) requires a loyalty,
award, or promotional gift card to state
on the card, code, or other device itself
that it is issued for loyalty, award, or
promotional purposes. This statement
must be on the front of the card, code,
or other device to enable consumers to
easily identify the type of card and
avoid potential consumer confusion
arising from the fact that a loyalty,
award, or promotional gift card may
otherwise look identical to a gift card
that a consumer may purchase directly
from a merchant.
In addition, the final rule requires
disclosure of the expiration date for the

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underlying funds to be stated on the
front of a loyalty, award, or promotional
gift card because such cards typically
have shorter expiration dates than other
certificates or cards subject to the rule.
See § 205.20(a)(4)(iii)(B). Where the card
and funds expiration date are the same,
a single disclosure regarding the
expiration dates satisfies the
requirement in § 205.20(a)(4)(iii)(B).
As previously noted, loyalty, award,
and promotional gift cards are intended
to be usable for a limited amount of time
to encourage consumers to use the card
quickly, which enables the program
sponsor to manage the costs of
providing consumers gift cards in
connection with loyalty, award, or
promotional programs. In addition,
loyalty, award, and promotional gift
cards are typically used by the initial
recipient and are not intended for giftgiving purposes. Therefore, loyalty,
award, or promotional gift cards are less
likely to be separated from the
accompanying disclosures than a gift
card or gift certificate that typically is
given to and used by someone other
than the original purchaser. The Board
also understands that there tend to be
fewer fees associated with loyalty,
award, and promotional cards, because
the costs associated with operating the
card program are generally borne by the
program sponsor. Therefore, the Board
believes it is less critical that the fees
imposed in connection with a loyalty,
award, or promotional gift card be stated
on the card itself.
Accordingly, § 205.20(a)(4)(iii)(C) in
the final rule permits persons subject to
the rule to disclose the amount of any
fees that may be imposed in connection
with the card, code, or other device, and
the conditions under which they may be
imposed, on or with the card, code, or
device. For example, issuers and other
persons subject to the rule may provide
fee information in materials
accompanying the card, code, or other
device, such as a card carrier or a
separate document containing
applicable terms and conditions, or on
a sticker affixed to the card. The revised
disclosure requirements recognize that
loyalty, award, or promotional cards are
generally used by the person that
initially obtained the card and are not
intended to be given as a gift, thus
increasing the likelihood that the user of
the card can easily access the
disclosures.
Nonetheless, to ensure that consumers
will have a means to access fee
information in connection with a
loyalty, award, or promotional gift card
even if they do not retain the fee
disclosures, § 205.20(a)(4)(iii)(D)
requires the disclosure on the card of a

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toll-free telephone number and, if one is
maintained, a Web site. The final rule
does not require that this contact
information appear on the front of the
card, however.16 Because many issuers
already maintain toll-free telephone
numbers and Web sites for consumers to
use for further information and often
provide this information on the cards
they issue, this requirement in
§ 205(a)(4)(iii)(D) should not impose
significant additional burden on issuers.
Overall, the Board believes the revised
disclosures in the final rule strike an
appropriate balance between the
competing considerations of limiting
potential consumer confusion or
surprise arising from the different terms
that may apply to loyalty, award, or
promotional gift cards, and avoiding
unnecessary costs and burdens on
companies that support or administer
loyalty, award, or promotional
programs.
Comment 20(a)(4)–1 provides
examples of loyalty, award, or
promotional programs. Under the
November 2009 Proposed Rule, cards,
codes, or other devices issued in
connection with a loyalty, award, or
promotional program would have
included, for example, gift cards mailed
to a consumer as a rebate on a product
that a consumer has purchased in
response to a sales promotion, and gift
cards given by a merchant to reward
frequent customers.
Industry commenters generally agreed
with the proposed examples,
particularly because they would apply
regardless of whether the consumer has
paid or provided any other value to
obtain the card, as in the case of rebate
cards. Industry commenters also urged
the Board to include additional
examples in the comment.
The final comment incorporates each
of the proposed examples, with certain
revisions in response to commenters’
suggestions, and is amended to indicate
that the list is not exclusive. Comment
20(a)(4)–1 also includes two new
examples to address cards, codes, or
other devices that may be distributed in
connection with a sales promotion, or
provided by companies to a charity or
community group for the charity or
group’s fundraising purposes (for
example, as a reward for a donation or
as a prize in a charitable event).
Comment 20(a)(4)–2 provides
examples of how a card, code, or other
device may indicate that it is issued for
loyalty, award, or promotional purposes
16 The toll-free telephone number and Web site
may also be the same toll-free telephone number
and Web site provided for customer service issues
or questions relating to the loyalty, award, or
promotional program.

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for purposes of § 205.20(a)(4)(iii)(A). For
example, the disclosure on the front of
the card, code, or other device may state
‘‘Reward’’ or ‘‘Promotional.’’
Comment 20(a)(4)–3 provides that if
no fees are imposed in connection with
a loyalty, award, or promotional gift
card, the disclosure on the card of a tollfree telephone number and Web site, if
one is maintained, is not required.
20(a)(5) Dormancy or Inactivity Fee
EFTA Section 915(a)(1) defines a
‘‘dormancy fee,’’ or an ‘‘inactivity charge
or fee’’ as a fee, charge, or penalty for
non-use or inactivity of a gift certificate,
store gift card, or general-use prepaid
card. See 15 U.S.C. 1693m(a)(1). In the
November 2009 Proposed Rule, the
Board proposed § 205.20(a)(5) to
implement this definition with nonsubstantive wording modifications to
improve readability. The Board did not
receive any comments on proposed
§ 205.20(a)(5), which is adopted as
proposed.
20(a)(6) Service Fee
EFTA Section 915(a)(3)(A) defines a
‘‘service fee’’ as a periodic fee, charge, or
penalty for holding or use of a gift
certificate, store gift card, or general-use
prepaid card. See 15 U.S.C.
1693m(a)(3)(A). In the November 2009
Proposed Rule, the Board proposed to
implement this definition in
§ 205.20(a)(6) using substantially the
same language as the statute.
Commenters did not oppose the
language in § 205.20(a)(6).
The Board also proposed comment
20(a)(6)–1 to clarify that a periodic fee
is a fee that may be imposed from time
to time for holding or using a gift
certificate, store gift card, or general-use
prepaid card. The proposed comment
also provided that such fees may
include a monthly maintenance fee, a
transaction fee, a reload fee, or a balance
inquiry fee, whether or not the fee is
waived for a certain period of time or is
only imposed after a certain period of
time. Proposed comment 20(a)(6)–1 also
clarified that a one-time initial issuance
fee is not a service fee, consistent with
EFTA Section 915(a)(3)(B), and
provided examples of other one-time
fees that are not service fees, including
cash-out fees.
The Board received numerous
comments on the clarification proposed
in comment 20(a)(6)–1. Consumer group
commenters and one state attorney
general commenter agreed with the
Board’s interpretation of ‘‘periodic fee.’’
Several industry commenters, however,
suggested that the Board’s interpretation
as set forth in the proposed definition of
‘‘service fee’’ is inconsistent with the

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statutory language, previous
interpretations of the term ‘‘periodic’’
under other consumer financial services
regulations, and state law
interpretations of ‘‘service’’ fees.
Industry commenters also noted that
one consequence of the Board’s
interpretation is that issuers would be
restricted from charging fees for certain
transactions that carry network costs for
the issuers, such as foreign transactions
and reloads. These commenters argued
that if issuers are generally not
permitted to recoup the costs of
providing these services, issuers may
decide to limit the functionality of
certificates or cards, such as by issuing
domestic-use only cards or nonreloadable cards. Finally, industry
commenters argued that the Board’s
interpretation would complicate
disclosures because of the limited space
on a certificate or card. Instead, industry
commenters recommended that the
Board interpret ‘‘periodic fee’’ to mean a
fee that is imposed at regular intervals,
which would include a monthly
maintenance fee, but not transaction
fees or reload fees that are triggered by
consumer activity.
The Board continues to believe that
the proposed interpretation of ‘‘periodic
fee’’ as it applies to ‘‘service fee’’ is
appropriate. As the Board noted in the
November 2009 Proposed Rule, the
statutory definition of ‘‘service fee’’
includes fees imposed for the ‘‘use’’ of a
gift certificate, store gift card, or generaluse prepaid card. See EFTA Section
915(a)(3)(A); 15 U.S.C. 1693m(a)(3)(A).
Thus, under the statute, service fees are
not limited to fees imposed for holding
a certificate or card. The Board believes
that the intent of the statute is to capture
activity-based and other fees related to
the use of the certificate or card, such
as transaction fees, reload fees, and
balance inquiry fees, in the definition of
‘‘service fee.’’ In addition, the Board is
concerned that a narrow interpretation
of ‘‘service fee’’ would result in a shift
in fee structures from fees imposed at
regular intervals to fees that are imposed
for a transaction or service associated
with the certificate or card.
Industry commenters also argued that
the Board’s interpretation is contrary to
the statute’s intent because it effectively
bans certain fees, instead of merely
restricting how frequently such fees may
be imposed. Specifically, these
commenters suggested that because
conducting a transaction constitutes
activity, a transaction fee contingent on
consumer activity could never be
charged, and the Board’s inclusion of
such fees in the definition of ‘‘service
fee’’ effectively prohibits such fees. See

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EFTA Section 915(b)(2)(A); 15 U.S.C.
1693m(b)(2)(A).
The Board does not agree that its
interpretation compels this result. The
statute and the regulation permit a fee
to be charged after one year of
inactivity. Therefore, a fee could be
charged contemporaneously with the
first consumer activity after the one-year
period of inactivity. For example, if an
issuer charges a reload fee on a generaluse prepaid card and a consumer
reloads the card after one year of
inactivity, the reload fee could be
imposed at that time assuming no other
fees have been imposed during that
month.
As explained in the November 2009
Proposed Rule, the Board believes that
interpreting the term ‘‘service fee’’ as
proposed, and thus limiting when such
fees may be imposed, will improve the
transparency and predictability of costs
to consumers. As a result, the
interpretation of ‘‘periodic fee’’ as it
applies to ‘‘service fee’’ is adopted as
proposed, but has been moved from
proposed comment 20(a)(6)–1 to
§ 205.20(a)(6) for clarity.
The Board also received comments
requesting that the Board provide a
complete list of all fees that are
included in the meaning of ‘‘service fee.’’
The list of fees in comment 20(a)(6)–1
is not meant to be an exhaustive list.
Comment 20(a)(6)–1 references the most
common fees associated with
certificates and cards. In response to
commenters’ suggestions, the Board is
including some additional examples in
comment 20(a)(6)–1. In addition to
providing that an ATM fee and a foreign
currency transaction fee are included in
the meaning of ‘‘service fee,’’ the Board
is providing examples of other fees that
are not considered ‘‘service fees,’’ as
discussed below.
The Board recognizes that certain fees
are unlikely to be imposed more than
once while underlying funds are still
valid, such as a supplemental card fee
or a lost or stolen certificate or card
replacement fee. The Board believes
such fees are akin to one-time fees and
should not be considered ‘‘periodic
fees.’’ Accordingly, the Board is
amending comment 20(a)(6)–1 to clarify
that these fees are not ‘‘service fees’’ for
purposes of § 205.20.
20(a)(7) Activity
Under § 205.20(d), no person may
impose a dormancy, inactivity, or
service fee on a gift certificate, store gift
card, or general-use prepaid card, unless
there has been no ‘‘activity’’ with respect
to the certificate or card, among other
things. For clarity, the Board is adding
a new § 205.20(a)(7) to define the term

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‘‘activity’’ for purposes of § 205.20.
Similar to the interpretation the Board
previously proposed in comment 20(d)–
2 in the November 2009 Proposed Rule,
the Board is defining ‘‘activity’’ as any
action that results in an increase or
decrease of the funds underlying a
certificate or card. The Board is also
specifically providing that the
imposition of a fee does not constitute
activity. Furthermore, the Board is
moving the guidance on ‘‘activity’’ from
comment 20(d)–2 to new comment
20(a)(7)–1. In proposing comment
20(d)–2, the Board solicited comment
on whether there were any other actions
taken by a consumer that should be
considered ‘‘activity.’’
Several industry commenters agreed
that providing additional examples
would be helpful. Based on the
comments received, the Board is
revising the language in proposed
comment 20(d)–2, now comment
20(a)(7)–1, to include an example
clarifying that if a consumer attempts a
transaction with a gift certificate, store
gift card, or general-use prepaid card,
but the transaction fails due to technical
or other reasons, such attempt does not
constitute activity with respect to the
certificate or card. Also, in response to
commenters’ suggestions, § 205.20(a)(7)
provides that ‘‘activity’’ does not include
an adjustment due to an error or a
reversal of a prior transaction. Comment
20(a)(7)–1 further provides that if the
funds underlying a gift certificate, store
gift card, or general-use prepaid card are
adjusted because there was an error or
the consumer has returned a previously
purchased good, the adjustment does
not constitute activity with respect to
the certificate or card.
20(b) Exclusions
EFTA Section 915(a)(2)(D) states that
the terms ‘‘general-use prepaid card,’’
‘‘gift certificate,’’ and ‘‘store gift card’’ do
not include an electronic promise,
plastic card, or payment code or device
that falls into one of six specified
categories. See 15 U.S.C.
1593m(a)(2)(D). For example, reloadable
cards that are not marketed or labeled as
a gift card or gift certificate are excluded
from the statutory definitions. Similarly,
prepaid cards that are not marketed to
the general public are excluded from the
statutory definitions. Thus, under the
statute, an excluded product is not
subject to the substantive restrictions
regarding when a dormancy, inactivity,
or service fee may be imposed, or on
expiration dates. These excluded
products also are not subject to the
statute’s disclosure requirements. See,
however, § 205.20(a)(4)(iii).

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Section 205.20(b) implements the
statutory exclusions and provides that
the terms ‘‘gift certificate,’’ ‘‘store gift
card,’’ and ‘‘general-use prepaid card’’ do
not include any cards, codes, or other
devices that fall under any of the six
exclusions specified in the statute. As
noted above, § 205.20(b) of the final rule
uses the term ‘‘card, code, or other
device,’’ instead of the term ‘‘electronic
promise, plastic card, or payment code
or device’’ for clarity. No substantive
difference is intended.
Proposed comment 20(b)–1 provided
guidance on the effect of qualifying for
any of the specified exclusions. The
comment stated that an excluded card,
code, or other device generally is not
subject to any of the substantive
restrictions or disclosure requirements
of the proposed rule. See, however,
§ 205.20(a)(4)(iii) with respect to loyalty,
award, or promotional gift cards. The
Board did not receive any comments on
the comment as proposed, and it is
adopted without change.
Proposed comment 20(b)–2 clarified
that a card, code, or other device may
qualify for one or more exclusions and
that a card, code, or other device that
falls within any of the exclusions
generally is not covered by the rule. The
comment is adopted generally as
proposed, with modifications for clarity.
For example, a corporation may give its
employees a gift card that is marketed
solely to businesses for incentive-related
purposes, such as to reward job
performance or promote employee
safety. In this case, the card, code, or
other device may qualify for the
exclusion in § 205.20(b)(3) for loyalty,
award, or promotional gift cards, or for
the exclusion in § 205.20(b)(4) for cards,
codes, or other devices not marketed to
the general public.
In addition, comment 20(b)–2 states
that as long as any one of the exclusions
apply, a card, code, or other device
generally is not covered by § 205.20,
even if other exclusions do not apply. In
the example, if the type of gift card
given by the corporation can also be
purchased by a consumer directly from
a merchant, the card does not qualify as
a card that is not marketed to the
general public because it can also be
obtained through retail channels. See
§ 205.20(b)(4), discussed below.
Nonetheless, the gift card would
nevertheless be exempt from the
substantive requirements of § 205.20
because it is still a loyalty, award, or
promotional gift card (provided that
certain disclosures are provided on or
with the card as required under
§ 205.20(a)(4)(iii)). For additional
clarification, the final comment
includes a second example addressing

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reloadable spending cards that may be
targeted to teenagers. Although such
cards do not qualify for the exclusion
for cards not marketed to the general
public, they may nonetheless be
excluded from the scope of the rule if
they are not marketed as gift cards or
gift certificates.
The six specific exclusions are
discussed below.

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20(b)(1) Usable Solely for Telephone
Services
Section 205.20(b)(1) implements the
exclusion for cards, codes, or other
devices that are usable solely for
telephone services. See EFTA Section
915(a)(2)(D)(i); 15 U.S.C.
1693m(a)(2)(D)(i). Proposed comment
20(b)(1)–1 set forth examples of
products that fall within this exclusion,
such as prepaid cards for long-distance
telephone services and prepaid cards for
wireless telephone service. The
proposed comment further clarified that
this exclusion also includes prepaid
products that may be used for other
services analogous in function to a
telephone, such as prepaid cards for
voice over Internet protocol (VoIP)
access time. Section 205.20(b)(1) and
comment 20(b)(1)–1 are adopted
substantially as proposed.
Many mobile phones today are
capable of a number of different
functions in addition to voice
communications, including sending text
messages and accessing the Internet.
Accordingly, the Board solicited
comment on whether it should exercise
its authority under EFTA Section 904 to
expand the exclusion to cover other
prepaid cards that may be redeemed for
similar or related technology services,
such as prepaid cards used to obtain
mobile broadband or Internet access
time.17
Industry commenters agreed that the
Board should expand the exclusion as
described to avoid restricting the types
of prepaid products that may be offered
today, as well as in the future. These
commenters further urged the Board to
expand the exclusion to cover prepaid
cards that would enable cardholders to
purchase applications that could be
used on mobile telephones. The final
rule does not incorporate the suggested
revisions.
The Board generally believes that
statutory exclusions should be
interpreted narrowly to ensure that
consumers receive the full protections
contemplated in the statute. By its
17 See, e.g., N.J. Rev. Stat. § 56:8–110 (excluding
prepaid telecommunications and technology cards
from the definitions of ‘‘gift card’’ and ‘‘gift
certificate’’).

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terms, EFTA Section 915(a)(2)(D)(i)
excludes cards, codes, or other devices
that are ‘‘usable solely for telephone
services.’’ See 15 U.S.C.
1693m(a)(2)(D)(i). While a consumer
that purchases a card that can be
applied toward Internet access time may
use that time for telecommunicationsrelated applications, it may also be used
for other applications or purposes. The
Board believes that if Congress had
intended to exclude cards that may be
redeemed for prepaid Internet access
and similar technology services from the
statutory provisions, it would have
specified that intent in the statute. The
Board is not aware of, and commenters
did not identify, any evidence that
Congress meant for consumers who
purchase cards that may used for other
technology-related services to be denied
protection against dormancy, inactivity,
or service fees, and expiration dates,
unlike consumers who purchase cards
that may be used for other goods or
services. Thus, the Board declines to
expand the exclusion.18
20(b)(2) Reloadable and Not Marketed or
Labeled as a Gift Card or Gift Certificate
Section 205.20(b)(2) implements the
exclusion for cards, codes, or other
devices that are reloadable and not
marketed or labeled as a gift card or gift
certificate. See EFTA Section
915(a)(2)(D)(ii); 15 U.S.C.
1693m(a)(2)(D)(ii).
Consistent with the statute, the card,
code, or other device generally must be
both reloadable and not marketed or
labeled as a gift card or gift certificate
to qualify for the exclusion. Thus, a
non-reloadable card generally is not
excluded, even if it is not marketed or
labeled as a gift card or gift certificate,
unless a different exclusion applies.19
Similarly, a reloadable card that is
marketed as a gift card or gift certificate
does not qualify for the exclusion.
‘‘Reloadable’’
Proposed comment 20(b)(2)–1
provided that a card, code, or other
device is ‘‘reloadable’’ if it has the
‘‘capability of having more funds added
by a cardholder after the initial
18 The Board notes, however, that the fee and
expiration date restrictions may cease to apply once
a certificate or card has been fully redeemed and
the funds are deducted from the certificate or card,
even if the underlying funds are not used to
contemporaneously purchase a specific good or
service. See, e.g., comment 20(e)–13, discussed
below.
19 As discussed below, a temporary nonreloadable card issued solely in connection with a
general-purpose reloadable card still qualifies for
the exclusion in § 205.20(b)(2), so long as the card
is not marketed as a gift card or gift certificate. See
§ 205.20(b)(2) and comment 20(b)(2)–6.

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purchase or issuance.’’ Several industry
commenters noted, however, that the
proposed comment was too narrow
given that many non-gift prepaid cards
are reloadable, but by persons other
than the cardholder. For example, many
payroll cards, health savings account
cards, and flexible spending account
cards are reloadable solely by the
employer. Similarly, university cards,
teen cards, and insurance cards may
also be reloadable by persons other than
the cardholder. Accordingly, these
commenters observed that the language
of proposed comment 20(b)(2)–1 could
lead to the unintended consequence of
covering certain non-gift prepaid
products under rules primarily intended
to cover consumer gift cards.
The Board did not intend to limit the
scope of the term ‘‘reloadable’’ in the
manner suggested by commenters.
Accordingly, comment 20(b)(2)–1 has
been revised in the final rule to remove
the limitation ‘‘by a cardholder’’ to take
into account the fact that a card, code,
or other device may be reloaded by
persons other than a consumer
cardholder.20
In addition, one industry commenter
urged the Board to clarify that whether
a card is reloadable should be
determined by whether reloadability is
permitted under the terms and
conditions of the prepaid card, rather
than by the technical ability of the
issuer to add value to the card. This
commenter was concerned that the
proposed comment potentially implied
that a card would be considered
‘‘reloadable’’ if the issuer or the
processor can add functionality to the
card allowing a card to be reloaded
regardless of the terms and conditions of
the card. The Board agrees with this
suggestion. The final comment clarifies
that a card, code, or other device is
‘‘reloadable’’ only if its terms and
conditions allow for funds to be added
after initial issuance or purchase,
regardless of whether the card issuer or
processor has the technical ability to
add functionality to the card, code, or
device that would permit the addition of
funds.
‘‘Marketed or Labeled as a Gift Card or
Gift Certificate’’
Proposed comment 20(b)(2)–2
clarified the meaning of the term
‘‘marketed or labeled as a gift card or gift
certificate.’’ The proposed comment
20 As discussed above, the Board has also revised
the definitions of ‘‘store gift card’’ and ‘‘general-use
prepaid card’’ in §§ 205.20(a)(2) and (a)(3) to remove
references to increasing or reloading a card ‘‘by a
consumer’’ to reflect that the amount on a card may
be increased or reloaded by a person other than a
consumer.

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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Rules and Regulations
provided that the term means directly or
indirectly offering, advertising, or
otherwise suggesting the potential use of
a card, code, or other device as a gift for
another person. The proposed comment
also stated that whether the exclusion
applies does not depend on the type of
entity that is making the promotional
message—for example, the actions of the
issuer, the retailer, the program
manager, or the payment network on
which a card is used could each
promote the use of a card as a gift card
or gift certificate and thus nullify the
exclusion. Finally, the proposed
comment stated that a certificate or card
could be deemed to be marketed or
labeled as a gift card or gift certificate
even if it is primarily marketed for
another purpose. Thus, for example, a
reloadable network-branded card would
be marketed or labeled as a gift card or
gift certificate if the issuer principally
advertises the card as a less costly
alternative to a bank account but
promotes the card in a television, radio,
newspaper, or Internet advertisement, or
on signage as ‘‘the perfect gift’’ during
the holiday season.
Two industry trade associations urged
the Board to use its exemption authority
to limit the scope of the marketing
provision to apply only to the actions of
the issuer. Specifically, these
commenters suggested that the Board
clarify that the exclusion in
§ 205.20(b)(2) applies as long as a
certificate or card was ‘‘reloadable and
not labeled or marketed by the issuer as
a gift card or gift certificate.’’ These
commenters expressed concern that the
proposed rule could frustrate the efforts
of an issuer seeking to avoid the labeling
and the marketing of their cards as gift
cards if actions by other parties in the
supply chain, including a retailer or a
merchandiser, could nullify the
application of the exception. For
example, these commenters noted that a
general-purpose reloadable card could
be deemed to be marketed as a gift card
notwithstanding the issuer’s actions if a
store clerk incorrectly stocked the
issuer’s cards in a display or combined
distinctly labeled cards in a single
display. Other industry commenters
urged the Board to clarify that issuers
would be protected from liability for
improper marketing of cards if they
maintained appropriate policies and
procedures regarding marketing. These
commenters expressed concern that
access to general-purpose reloadable
cards for the unbanked and the
underbanked could otherwise be
restricted due to compliance concerns.
One industry trade association
commenter representing convenience

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stores urged the Board to exclude
retailers from the rule altogether if they
do not issue gift cards.
Comment 20(b)(2)–2 is adopted
generally as proposed, with certain
revisions for clarity. Under the final
comment, a card, code, or other device
is deemed to be marketed or labeled as
a gift card or gift certificate if anyone
(other than the consumer-purchaser of
the card 21), including the issuer, the
retailer, the program manager that may
distribute the card, or the payment
network on which a card is used,
promotes the use of the card as a gift
card or gift certificate. Thus, the final
rule does not limit the scope of the
exclusion in § 205.20(b)(2) to the actions
of the card issuer. The Board notes that
the gift card provisions of the Credit
Card Act broadly encompass the actions
of ‘‘any person,’’ and generally are not
limited to the acts of the issuer, except
in the case of disclosures that must be
provided prior to purchase. See, e.g.,
EFTA Section 915(b)(3)(B); 15 U.S.C.
1693m(b)(3)(B). Moreover, the Board
believes that restricting application of
the marketing provisions to issuer
actions would undermine the consumer
protection purposes of the statute. For
example, even if an issuer of a generalpurpose reloadable card were to avoid
labeling or otherwise indicating on a
certificate or card that it is intended for
gift-giving purposes, the retailer or
merchandiser may display the generalpurpose reloadable card with store gift
cards and gift certificates under a single
sign that prominently indicated the
availability of gift cards. Limiting the
scope of the marketing provisions to
issuer actions would not therefore
sufficiently protect consumers acting
reasonably under the circumstances
from inadvertently purchasing the
general-purpose reloadable card in the
belief they were purchasing a gift card.
Such consumers would then be
surprised when the balance on the card
is quickly drawn down by fees or short
expiration dates which is contrary to the
intent of the marketing provisions.
Nonetheless, the Board understands
that the broad scope of the rule to also
cover the actions of any party that may
be involved in the distribution or
promotion of a certificate or card may
pose substantial compliance risks for
issuers. As further discussed under
21 Thus, a card would not be deemed to be
marketed or labeled as a gift card or gift certificate
as a result of actions by the consumer-purchaser.
For example, if the purchaser gives the card to
another consumer as a ‘‘gift,’’ or if the primary
cardholder contacts the issuer and requests a
secondary card to be given to another person for his
or her use, such actions do not cause the card to
be marketed as a gift card or gift certificate.

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16593

comment 20(b)(2)–4, the exclusion in
§ 205.20(b)(2) continues to apply so long
as a certificate or card is not marketed
or labeled as a gift card or gift certificate
and if persons subject to the rule
maintain policies and procedures
reasonably designed to avoid such
marketing.
In addition, in response to some
commenters’ concerns, comment
20(b)(2)–2 clarifies that the mere
mention that gift cards or gift certificates
are available in an advertisement or on
a sign that also indicates the availability
of other excluded prepaid cards does
not by itself cause the excluded prepaid
cards to be marketed as a gift card or a
gift certificate. The key consideration is
whether a consumer acting reasonably
under the circumstances could be led to
believe that all certificates or cards
referenced in the advertisement or the
sign are gift cards or gift certificates. For
instance, a retailer could state in an
advertisement ‘‘Gift Cards and Prepaid
Cards Sold Here’’ to promote the
availability of gift cards and generalpurpose reloadable cards in the store
without causing the general-purpose
reloadable card to be marketed as a gift
card or gift certificate, provided that a
consumer acting reasonably under the
circumstances would not be led to
believe that all certificates or cards
referenced in the advertisement are gift
cards or gift certificates. Similarly, the
posting of a sign in a store which
communicates the general availability of
gift cards does not by itself constitute
the marketing of other excluded prepaid
cards that may also be sold in the store
as gift cards or gift certificates, provided
that a consumer acting reasonably under
the circumstances is not led to believe
that the sign applies to all prepaid
products sold in the store. (See,
however, comment 20(b)(2)–4.ii.) Such
determinations would depend on the
facts and circumstances of an individual
sign or advertisement.
Proposed comment 20(b)(2)–3
provided positive and negative
examples of the term ‘‘marketed or
labeled as a gift card or gift certificate.’’
The comment is adopted generally as
proposed.
Under the final comment, positive
examples of marketing or labeling as a
gift card or gift certificate include
displaying the word ‘‘gift’’ or ‘‘present,’’
displaying a congratulatory message,
and incorporating gift-giving or
celebratory imagery or motifs on the
card, certificate or accompanying
material, such as documentation,
packaging and promotional displays.
See comment 20(b)(2)–3.i. In contrast, a
card, code, or other device is not
marketed or labeled as a gift card or gift

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certificate if the issuer, seller, or other
person represents that the card, code, or
other device can be used as a substitute
for a checking, savings, or deposit
account, as a budgetary tool, or to cover
emergency expenses. Similarly, a card,
code, or other device is not marketed as
a gift card or gift certificate if it is
promoted as a substitute for travelers
checks or cash for personal use, or
promoted as a means of paying for a
consumer’s health-related expenses. See
comment 20(b)(2)–3.ii. The final rule
removes the reference to use of a
certificate or card as a substitute for a
travelers check or cash ‘‘by the card
purchaser’’ to reflect the fact that
someone other than the purchaser may
use the certificate or card for travel
expenses. See comment 20(b)(2)–3.ii.C.

emcdonald on DSK2BSOYB1PROD with RULES2

Policies and Procedures To Avoid
Marketing as a Gift Card or Gift
Certificate
As discussed above, a gift card usable
at a particular merchant may be
purchased by a consumer directly from
the merchant at the merchant’s store. In
this type of arrangement, the merchant
is typically the primary party involved
in issuing the card and operating the
card program. As such, the merchantissuer can be expected to have
substantial control over all facets of the
card program, including how the card is
sold or marketed.
In other cases, a gift card may be sold
to consumers through another merchant
or retailer, such as a grocery store or a
drug store, on display racks that may
make retail gift cards available alongside
gift cards usable at other merchants and
other types of prepaid cards, including
general-purpose reloadable cards and
telephone cards. In this type of
arrangement, multiple parties are
generally involved in the card
distribution process. These parties may
include: an issuer (whether it is a
merchant or a bank); a program manager
who works with issuers to administer
any or all aspects of a card program,
including transaction processing,
distribution, and marketing; and a seller
or distributor of the card.22 A seller or
distributor of the card can be an issuer,
a program manager, or another party,
such as a shopping mall or a retailer. In
these arrangements, responsibilities for
22 In addition to these parties, a processor may
work with the issuer and the program manager to
process card transactions, and in some cases
provide Web site and telephone customer service.
For open-loop card programs, the payment network
operates the network and establishes operating
rules for card issuers, processors, and merchants or
ATMs that accept the card. The payment network
may also review and approve a card program in
order for the particular card to carry the network
brand.

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operating the program, including
compliance with applicable laws or
payment network rules, are generally
allocated by contract.
When multiple parties are involved in
a card program, the issuer may not play
a significant role in the card distribution
process and thus may have less control
over how the card is displayed or
marketed at the locations where the card
is sold. A rule that depends upon how
a card is marketed therefore may pose
substantial compliance risks for an
issuer that cannot fully control the
venues and mediums in which its
prepaid cards are marketed to
consumers. For example, where a card
is sold in a substantial number of retail
outlets, the card issuer cannot verify in
every instance how the card is
displayed or marketed at each retail
outlet to ensure that it is not being
marketed as a gift card or gift certificate
through signage, advertisements, or
otherwise.
To address this issue, proposed
comment 20(b)(2)–4 provided that a
reloadable card, code, or other device is
not marketed or labeled as a gift card or
gift certificate if entities subject to the
rule maintain policies and procedures
reasonably designed to avoid such
marketing. Such policies and
procedures would include contractual
provisions prohibiting a generalpurpose reloadable card from being
marketed as a gift card and controls to
regularly monitor or otherwise verify
that the cards are not being marketed as
such. The proposed comment also
included positive and negative
examples of the exclusion in
§ 205.20(b)(2).
One example of procedures in which
a card, code, or other device is not
marketed as a gift card or gift certificate
was where the issuer or program
manager sets up two physically
separated displays at a retailer, one for
gift cards and another for excluded
products, including general-purpose
reloadable cards, such that a reasonable
consumer would not believe that the
excluded cards are gift cards. Under this
example, the exclusion in § 205.20(b)(2)
applies even if a retail clerk
inadvertently stocks or places some of
the general-purpose reloadable cards on
the gift card display.
In a second proposed example, the
issuer or program manager sets up a
single display that contains a variety of
prepaid cards, including gift cards
subject to the rule and otherwise
excluded prepaid products, such as
general-purpose reloadable cards. A sign
stating ‘‘Gift Cards’’ appears prominently
on top of the display. Under the second
example, any general-purpose

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reloadable cards sold under those
circumstances does not qualify for the
exclusion in § 205.20(b)(2) because the
issuer or program manager does not
maintain policies and procedures
reasonably designed to avoid the
marketing of the general purpose
reloadable cards as gift cards or gift
certificates.
Several industry commenters urged
the Board to include additional
examples of the exclusion in
§ 205.20(b)(2). These commenters
included card issuers, program
managers and distributors of prepaid
cards, retailers, and industry trade
associations. In particular, these
commenters stated that requiring two
separate displays as contemplated in the
proposed examples would create
significant difficulties for retailers
because of space constraints. Industry
commenters expressed concern that
instead of providing space for additional
displays, some retailers may choose to
stop selling general-purpose reloadable
cards altogether. As a result, industry
commenters believed that access to such
products for the unbanked and
underbanked could be reduced.
Industry commenters suggested
various additional measures that could
be undertaken to permit the sale of gift
cards and otherwise excluded prepaid
cards in the same retail display without
causing the excluded cards to be
marketed as a gift card or gift certificate.
These measures included segregating
general-purpose reloadable cards and
gift cards on different sides of a display
rack with a sign at the top of each side
differentiating the products; using
colors, design, and/or signage to
differentiate between separate products
on the same display (for example, signs
indicating ‘‘reloadable cards’’ and ‘‘gift
cards,’’ as applicable); or requiring the
display to indicate a generic label such
as ‘‘prepaid cards.’’
Industry commenters also asserted
that the final rule should expand the
example of a retail clerk inadvertently
stocking a general-purpose reloadable
card inappropriately on a gift card
display to apply to consumer actions as
well. These commenters further stated
that the final rule should permit
inadvertent or bona fide errors in the
placement of signage by a retail clerk or
third-party merchandiser, such that the
inadvertent placement of gift card
advertising in the section of a display or
portion of a rack for general-purpose
reloadable cards does not nullify the
exclusion in § 205.20(b)(2) for the
general-purpose reloadable cards.
Comment 20(b)(2)–4 is adopted in the
final rule generally as proposed with
certain revisions for clarity. The final

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comment provides that the exclusion in
§ 205.20(b)(2) applies if a reloadable
card, code, or other device is not
marketed or labeled as a gift card or gift
certificate and if persons subject to the
rule, including issuers, program
managers, and retailers, maintain
policies and procedures reasonably
designed to avoid such marketing. Such
policies and procedures may include:
contractual provisions prohibiting a
card, code, or other device from being
marketed or labeled as a gift card or gift
certificate; merchandising guidelines or
plans regarding how the product must
be displayed in a retail outlet; and
controls to regularly monitor or
otherwise verify that the card, code, or
other device is not being marketed as a
gift card or gift certificate. The final
comment further states that whether a
person has marketed a reloadable card,
code, or other device as a gift card or gift
certificate will depend on the fact and
circumstances, including whether a
reasonable consumer would be led to
believe that the card, code, or other
device is a gift card or gift certificate.
The final comment also includes the
two proposed examples discussed above
with minor revisions. The example in
comment 20(b)(2)–4.i, which sets forth
the scenario where separate displays
have been set up for gift cards and for
other excluded prepaid cards, including
general-purpose reloadable cards, has
been revised to provide that the
exclusion applies even if a consumer
inadvertently places a general-purpose
reloadable card on the gift card display.
However, comment 20(b)(2)–4.i does not
incorporate commenters’ suggestions to
apply the exclusion to circumstances
where signage has been inadvertently
placed on the wrong display (such as a
sign stating ‘‘Gift Cards’’ placed on or
near the general-purpose reloadable
card display) because consumers acting
reasonably under the circumstances
would likely be led into believing that
they are purchasing gift cards from the
general-purpose reloadable card display.
The final comment includes two new
examples to illustrate additional
circumstances where a reloadable card,
code, or device is not marketed or
labeled as a gift card or gift certificate.
The additional examples seek to strike
a balance between protecting consumers
from being misled regarding the type of
prepaid cards that they are purchasing
and the possibility that overly restrictive
marketing provisions may present
significant compliance challenges in
retail environments where there may
not be sufficient space for separate
displays for covered and non-covered
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The first new example is in comment
20(b)(2)–4.iii. In this example, the issuer
or program manager sets up a single
multi-sided display at the retailer on
which a variety of prepaid card
products, including store gift cards and
general-purpose reloadable cards, are
sold. Gift cards are segregated from
excluded cards, with gift cards on one
side of the display and excluded cards
on a different side of a display. Signs of
equal prominence at the top of each side
of the display clearly differentiate
between gift cards and the other types
of prepaid cards that are available for
sale. The retailer does not use any other
more conspicuous signage suggesting
the general availability of gift cards,
such as a large sign stating ‘‘Gift Cards’’
at the top of the display or located near
the display. The example illustrates that
the exclusion in § 205.20(b)(2) applies to
the general-purpose reloadable cards
because of the maintenance of policies
and procedures reasonably designed to
avoid the marketing of the reloadable
cards as gift cards or gift certificates,
even if a retail clerk inadvertently stocks
or a consumer inadvertently places a
general-purpose reloadable card in the
gift card section of the display.
Comment 20(b)(2)–4.iv., the second
new example, addresses the sale of
prepaid cards at a checkout lane where
gift cards are sold side-by-side in the
same lane along with excluded cards. In
the example, the retailer does not use
any signage or other indicia suggesting
the general availability of gift cards on
the display. In this case, the retailer has
not affirmatively indicated or
represented at the checkout lane that
only gift cards or gift certificates are
available for purchase. Accordingly,
there has been no marketing of the
excluded products as gift cards or gift
certificates, and the exclusion in
§ 205.20 applies to the non-gift cards.
Several industry commenters stated
that how the card and related card
packaging is labeled and packaged
should be the sole determining factor as
to whether the card is marketed or
labeled as a gift card or gift certificate.
In this regard, these commenters stated
that it should be sufficient to indicate
clearly on packaging that an excluded
card is ‘‘Not a Gift Card,’’ ‘‘Not for Gift
Giving Purposes,’’ or similar words to
that effect, to avoid marketing or
labeling a prepaid product as a gift
certificate or gift card. The Board
believes, however, that merely labeling
on outside packaging that a prepaid card
product is ‘‘not a gift card’’ or that it is
‘‘not intended for gift purposes,’’ is not
sufficient to alert consumers that they
are not buying a gift card if other
indicia, including the signage used at

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the point of purchase or the manner in
which cards are displayed, are
inconsistent with the messaging on the
packaging.
Given the various entities that may be
involved in distributing or selling
certificates or cards subject of the rule,
the Board understands that several
parties may be subject to the rule with
respect to the same prepaid card
program, including the issuer, the
program manager, and the retailer. To
the extent that more than one party may
be liable under the final rule, those
parties may contract among themselves
to ensure compliance. See, e.g.,
§ 205.4(d) (stating that institutions
providing EFT services jointly may
contract among themselves to allocate
requirements under the regulation).
Thus, for example, disclosures required
to be on a certificate or card by
§ 205.20(d)(2) and (e)(3) may be satisfied
by the issuer, while disclosures that
must be provided prior to purchase
under § 205.20(c)(3) may be satisfied by
another party, such as the retailer
(assuming the issuer does not also
provide the requisite disclosures on the
packaging). Similarly, marketing
responsibilities may be allocated by
contract. Compliance by one party
would satisfy the compliance
obligations for any other person with
respect to that certificate or card.
However, if the party that has
contractually agreed to satisfy a
compliance obligation fails to do so,
each of the parties is potentially
accountable under the EFTA and the
final rule. These parties could also
allocate among themselves the financial
obligation for any liability resulting
from the failure.
A few industry commenters urged the
Board to clarify that general-use
reloadable cards may be offered for sale
on Web sites that also sell gift cards so
long as the consumer is given
appropriate disclosure prior to purchase
that the general-purpose reloadable card
is not a gift card. These commenters
believed that such a clarification is
appropriate even if the Web site
advertises ‘‘gift cards’’ or ‘‘gifting,’’ or if
its Web address incorporates a reference
to gift cards or gifting.
The Board is not persuaded that the
exclusion in § 205.20(b)(2) should apply
in these circumstances. The Board
believes that a Web site’s display of a
banner advertisement or a graphic on its
home page that prominently displays
‘‘Gift Cards,’’ ‘‘Gift Giving,’’ or similar
language without mention of other
available products, or inclusion of the
terms ‘‘gift card’’ or ‘‘gift certificate’’ in its
Web address, creates the same potential
for consumer confusion as a sign stating

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‘‘Gift Cards’’ at the top of a prepaid card
display. A consumer acting reasonably
under the circumstances may be led to
believe that all prepaid products sold on
the Web site are gift cards or gift
certificates. Thus, under these facts, the
Web site has marketed all such
products, including any general-purpose
reloadable cards that may be sold on the
Web site, as gift cards or gift certificates,
and the exclusion in § 205.20(b)(2) does
not apply. New comment 20(b)(2)–5
provides this guidance.
Temporary Cards Issued in Connection
With a General-Purpose Reloadable
Card
Some general-purpose reloadable
cards that are not intended to be
marketed as a gift card, but rather as an
alternative to a bank account (or account
substitute), such as for the unbanked,
may be sold initially as a temporary
non-reloadable card. After the card is
purchased, the cardholder may call the
issuer to register the card. Once the
issuer has obtained the cardholder’s
personal information, a new
personalized, reloadable card is sent to
the cardholder to replace the temporary
card.
Under one model, the cardholder may
use the temporary non-reloadable card
to engage in transactions immediately
after card purchase and up until the
card is registered by the consumer and
replaced with the personalized,
reloadable card. Under another model,
the temporary non-reloadable card may
not be used by the consumer for
purchases until the consumer calls to
register the card. Under the second
model, the temporary card can be used
after registration until the personalized,
reloadable card is received and
activated by the consumer.
The Board solicited comment on the
appropriate treatment of such temporary
non-reloadable cards in light of the fact
that the statute appears to cover all nonreloadable cards without exception.
Under one proposed approach, the
restrictions limiting fees and expiration
dates would not apply either to the
temporary non-reloadable card or to the
reloadable replacement card. Under a
second approach, the restrictions would
apply during the full account
relationship if the card is initially
issued as a non-reloadable card. Under
a third approach, the restrictions
limiting fees and expiration dates would
apply solely to the temporary nonreloadable card, but not to the
reloadable replacement card.
The majority of industry commenters
urged the Board to exclude temporary
non-reloadable cards from the scope of
the rule altogether because such cards

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are issued only in conjunction with
general-purpose reloadable cards and
are never marketed or sold as anything
other than as a reloadable product.
Several industry commenters also
asserted that these cards are initially
issued as non-reloadable cards to
control fraud and to reduce the risk of
money laundering. Thus, they argued
that applying the rule to the card if it
was initially non-reloadable, but not if
the temporary card was reloadable,
would unnecessarily limit issuers’
ability to control for risks as issuers
would shift to issuing the temporary
card as a reloadable product to avoid
application of the rule. Industry
commenters and one nonprofit
organization commenter focused on
serving the unbanked also noted that
covering the temporary non-reloadable
card, but not the reloadable replacement
card, could lead to consumer confusion
because different fee and expiration date
terms would apply to the different cards
depending on whether or not the card
was reloadable. The nonprofit
organization commenter urged the
Board not to cover temporary nonreloadable cards to avoid adversely
impacting the business model for
general-purpose reloadable cards and
thereby restricting the availability of the
product for the growing number of
consumers that use these cards in place
of bank accounts.
In contrast, consumer groups urged
the Board to cover temporary nonreloadable cards issued in conjunction
with reloadable cards that serve as
account substitutes. Consumer groups
cited consumer confusion caused by the
fact that many of these products are sold
on the same racks as gift cards.
One industry marketer and distributor
of prepaid products and services also
expressed concern about consumer
confusion associated with the marketing
of general-purpose reloadable cards. In
particular, this industry commenter
cited its own experience and industry
data indicating that more than 60% of
all consumers that purchase generalpurpose reloadable cards in an
unassisted environment (such as from a
supermarket display) subsequently
either never register or reload the card.
In this commenter’s view, the high rate
of failure for registering or reloading the
card suggests a high degree of consumer
confusion with many consumers who
intend to purchase a gift card
inadvertently purchasing a generalpurpose reloadable card instead. This
commenter urged the Board to adopt the
third approach and cover any temporary
non-reloadable card issued in
conjunction with a general-purpose
reloadable card until the card is

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registered and replaced with a
reloadable card. Under this approach, a
consumer that inadvertently bought a
general-purpose reloadable card
thinking it was a gift card would be able
to avoid most fees.
The final rule does not cover
temporary non-reloadable cards issued
solely in connection with a generalpurpose reloadable card. Section
205.20(b)(2) has been revised in the
final rule to provide that for purposes of
the exclusion, the term ‘‘reloadable’’ also
includes a temporary non-reloadable
card if it is issued solely in connection
with a reloadable card, code, or other
device. New comment 20(b)(2)–6
provides additional guidance regarding
temporary non-reloadable cards issued
solely in connection with a generalpurpose reloadable card.
The Board is persuaded that
excluding temporary non-reloadable
cards as a general-purpose reloadable
card under § 205.20(b)(2) is appropriate
to avoid consumer confusion if they are
not marketed or labeled as a gift card or
gift certificate. The Board believes that
consumers likely will be confused if
terms of the temporary non-reloadable
card differ substantially from the terms
of the replacement reloadable card. The
Board also believes that any consumer
confusion resulting from consumers
inadvertently purchasing generalpurpose reloadable cards instead of gift
cards is more effectively addressed
through policies and procedures
designed to avoid the marketing of
general-purpose reloadable cards as gift
cards or gift certificates, see, e.g.,
comment 20(b)(2)–4, rather than by
covering temporary non-reloadable
cards under the rule.
In addition, the Board is concerned
that covering the temporary nonreloadable card may create regulatory
incentives that would unduly restrict
issuers’ ability to address potential
fraud. The Board understands that some
issuers today issue temporary cards in
non-reloadable form to encourage
consumers to register the card and
provide customer identification
information for Bank Secrecy Act
purposes and to enable the issuer to
track which cards have been registered.
A rule that would apply only if the
temporary card was non-reloadable
would therefore limit issuers’ options
without significant consumer benefit
because issuers would likely shift to
issuing reloadable temporary cards to
avoid the rule’s restrictions on
dormancy, inactivity, and service fees
and on expiration dates.

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20(b)(3) Loyalty, Award, or Promotional
Gift Card
Section 205.20(b)(3) implements the
exclusion for cards, codes, or other
devices for loyalty, award, or
promotional gift cards. See EFTA
Section 915(a)(2)(D)(iii); 15 U.S.C.
1693m(a)(2)(D)(iii). The Board did not
receive comment on the exclusion as
proposed and it is adopted without
change.
As discussed above, the term ‘‘loyalty,
award, or promotional gift card’’ is
defined in § 205.20(a)(4). While certain
disclosures must be provided to meet
the definition, a loyalty, award, or
promotional gift card is not subject to
the substantive restrictions in § 205.20,
including the restrictions on imposing
dormancy, inactivity, or service fees, or
on expiration dates. A loyalty, award, or
promotional gift card also is not subject
to the prohibition on charging fees to
replace an expired card if funds remain
valid under § 205.20(e)(4).23
20(b)(4) Not Marketed to the General
Public
Section 205.20(b)(4) implements the
exclusion for cards, codes, or other
devices that are not marketed to the
general public. See EFTA Section
915(a)(2)(D)(iv); 15 U.S.C.
1693m(a)(2)(D)(iv). As explained in
proposed comment 20(b)(4)–1, whether
a card is ‘‘marketed to the general
public’’ depends on the facts and
circumstances, but the term generally
describes cards, codes, or other devices
that are offered, advertised or otherwise
promoted to the general public. The
proposed rule and commentary
provided guidance on factors to be
considered in determining whether a
card, code or device is marketed to the
general public.
Commenters generally supported the
proposed rule and commentary,
although some industry commenters
disagreed with or requested
modifications to the commentary,
including to certain of the examples, as
discussed below. The final rule adopts
§ 205.20(b)(4) and the related
commentary substantially as proposed,
with an additional clarification
regarding the posting of policies that
funds will be disbursed through prepaid
cards.
In the final rule, comment 20(b)(4)–1
states that a card, code, or other device
23 A card, code, or other device that qualifies for
the exclusion in § 205.20(b)(3) as a loyalty, award,
or promotional gift card remains exempt from the
substantive restrictions of § 205.20 even if it also
bears celebratory motifs or terms that would cause
it to be marketed or labeled as a gift card or gift
certificate under § 205.20(b)(2). See also comment
20(b)–2.

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may be marketed to the general public
through any advertising medium,
including television, radio, newspaper,
the Internet, or signage. In determining
whether the exclusion applies to a
particular card, code, or other device,
comment 20(b)(4)–1 identifies a number
of factors that should be considered,
including the means or channel through
which the card, code, or device may be
obtained by a consumer, the subset of
consumers that are eligible to obtain the
card, code, or other device, and whether
the availability of the card, code, or
device is advertised or otherwise
promoted in the marketplace. The
comment also makes clear that the
method of distribution by itself is not
dispositive in determining whether a
card, code, or other device is marketed
to the general public.
One commenter requested
clarification that the posting of a
company policy that funds may be
disbursed by prepaid card (such as a
sign posted at a cash register or
customer service center that store credit
will be issued by prepaid card) does not
constitute the marketing of a card, code,
or other device to the general public.
Comment 20(b)(4)–1 has been modified
accordingly. The Board believes such
postings do not constitute marketing to
the general public because they are not
intended to advertise or promote the
availability of prepaid cards. Rather,
they are intended to disclose company
policy to consumers who might
otherwise expect cash refunds.
Comment 20(b)(4)–2, which is
adopted substantively as proposed
except as noted below, provides six
examples illustrating the application of
the exclusion. For instance, a merchant
may sell its gift cards at a discount to
a business, either directly or indirectly
through a third party. The business that
purchases the cards may give them to
employees or loyal consumers as
incentives or rewards. In determining
whether the gift card is marketed to the
general public, the merchant-issuer
must consider whether the card is of a
type that is advertised or made available
to consumers generally or can be easily
obtained elsewhere. If the card may also
be purchased through retail channels,
the exclusion in § 205.20(b)(4) does not
apply, even if the consumer obtained
the card as an incentive or reward. See
comment 20(b)(4)–2.i. Some industry
commenters requested that the Board
clarify that marketing to the general
public does not include business-tobusiness advertisement of gift cards,
where the business purchaser of the
cards may in turn distribute such cards
to consumers. The Board declines to
make this revision. Consumers could be

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confused if they receive gift cards that
appear substantially similar to those
that they could have purchased directly
from a merchant, but contain different
terms and conditions, such as a shorter
expiration date.24
Similarly, the Board also considered
whether cards issued or sold pursuant
to a marketing campaign that targets a
specific subset of consumers should fall
within the exclusion. Some industry
commenters urged the Board to view
sales of gift cards that are limited to
existing customers as falling within the
exclusion for cards not marketed to the
general public because of the steps
required to become a customer, and
therefore, to become eligible to purchase
a gift card from the merchant. However,
the Board believes that such a broad
interpretation of the exclusion for cards
not marketed to the general public
would create a loophole and undermine
the protections afforded to consumers
under the rule. Therefore, the example
in comment 20(b)(4)–2.ii states that a
national retail chain could decide to
market its gift cards only to members of
its frequent buyers’ program. Similarly,
a bank may decide to sell gift cards only
to its customers. However, if any
member of the general public may
become a member of the program or a
customer of the bank, the general public
would still be able to obtain the cards
and such cards are covered by the rule,
unless another exclusion applies. See
comment 20(b)(4)–2.ii.
Likewise, proposed comment
20(b)(4)–2.iii included reloadable cards
advertised to teenagers to help them
manage their everyday expenses and for
emergencies, or marketed to parents to
enable them to monitor their teenager’s
spending, as a card marketed to the
general public. Some institutions argued
that the example should be limited to
‘‘gift cards’’ advertised to teenagers in
recognition that other types of cards,
such as reloadable cards, marketed to
teens may qualify for a different
exclusion under the rule. The Board
declines to so limit the example because
a card’s status as a gift card does not
affect whether the card is marketed to
the general public. However, as noted
above, certificates or cards that do not
qualify for one exclusion may
nonetheless qualify for another
exclusion. Comment 20(b)–2 has been
revised, as discussed above, to address
the application of other exclusions to
teen cards.
In contrast to the above examples,
where the availability of the certificate
24 Such cards may, however, qualify for the
exclusion in § 205.20(b)(3) for loyalty, award, or
promotional gift cards.

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or card itself is not advertised or
otherwise promoted, but rather, is
merely used as the means through
which funds are delivered to a
consumer, the Board believes the
certificate or card is not marketed to the
general public. Proposed comment
20(b)(4)–2 included four additional
examples of cards that may fall within
the exclusion depending on the
circumstances: (a) A card containing
insurance proceeds provided by an
insurance company to a customer to
settle a claim; (b) a card containing
travel expenses or per diem funds
provided by a business to an employee;
(c) a card containing store credit
provided by a retailer to a customer
following a merchandise return if the
card states that it is issued for store
credit; and (d) a card containing tax
refunds provided by a tax preparer to a
customer. See proposed comments
20(b)(4)–2.iv.–vii.
The final comment adopts three of the
four proposed examples substantively as
proposed. However, the Board is not
adopting the proposed example
regarding travel expense or per diem
cards. Specifically, the Board had
proposed as an example of a card not
marketed to the general public a prepaid
card provided by an employer to its
employees to cover travel expenses and
per diem. See proposed comment
20(b)(4)–2.v. These cards are intended
to be used for business purposes. In
light of the clarification in comment
20(a)–4 that the rule’s scope is limited
to cards, codes or other devices sold or
issued to consumers primarily for
personal, family, or household
purposes, these cards would not be
subject to the rule. Thus, to eliminate
redundancies, the proposed per diem
and travel expense example is not
adopted.
While commenters generally
supported the proposed examples, some
industry commenters argued that the tax
refund card example should be
modified to specifically exclude tax
refund cards that are available only by
becoming a customer of the tax
preparer. The Board does not believe
that this fact is relevant because,
although the card would only be
available to consumers who become
customers of a tax preparer, any member
of the general public typically may
become a customer. Such a scenario
would be indistinguishable from the
national retail chain example described
in comment 20(b)(4)–2.ii. Instead, the
Board believes that whether a tax refund
card is marketed to the general public
depends upon other facts and
circumstances. For example, if a tax
preparer merely provides the prepaid

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card as a mechanism for providing a tax
refund to a consumer, and does not
advertise or otherwise promote the
ability to receive a tax refund through a
prepaid card, the card is excluded
because it is not marketed to the general
public. However, if the tax preparer
engages in a marketing campaign that
touts the ability of a consumer to receive
a prepaid card for ‘‘faster’’ access to their
tax refund proceeds, the tax refund card
is not exempt under this exclusion. See
comment 20(b)(4)–2.vi.
20(b)(5) Issued in Paper Form Only
Section 205.20(b)(5) sets forth the
exclusion for cards, codes, or other
devices that are issued in paper form
only. See EFTA Section 915(a)(2)(D)(v);
15 U.S.C. 1693m(a)(2)(D)(v). Proposed
comment 20(b)(5)–1 explained that the
exclusion applies where the sole means
of issuing the card, code, or other device
is in paper form. Examples of excluded
paper gift certificates or cards included
paper certificates or vouchers
distributed by a merchant that are
redeemable for a specified dollar
amount.
A few industry commenters urged the
Board to remove the proposed exclusion
stating that the exclusion could
adversely impact the gift card industry
as some merchants may elect to revert
back to using paper gift certificates to
avoid the fee and expiration date
restrictions set forth in the rule. Other
industry commenters believed that,
given the cost savings and enhanced
features offered by electronic gift cards
compared to paper certificates, retailers
and gift card issuers would be unlikely
to return to paper simply to avoid
application of the rule.
The exclusion for cards, codes, or
other devices that are issued in paper
form only is statutory, and accordingly,
§ 205.20(b)(5) is adopted as proposed.
Comment 20(b)(5)–1 is also adopted
generally as proposed. The comment
explains that the exclusion does not
apply simply because a card, code, or
other device is reproduced or otherwise
printed on paper. For example, a bar
code, card or certificate number, or
certificate or coupon provided to a
consumer electronically and redeemable
for goods or services is not issued in
paper form, even though it may be
reproduced or otherwise printed on
paper by the consumer.25 In this
circumstance, although the consumer
might hold a paper facsimile of the card,
code, or other device, the exclusion
25 An issuer may, however, replace a gift
certificate that was initially issued in paper form
only with a plastic card or electronic code (for
example, to replace a lost paper certificate) without
falling outside the exclusion in § 205.20(b)(5).

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does not apply because the information
necessary to redeem the value was
issued to the consumer in electronic
form.
The comment does not, however,
preclude a paper certificate bearing a
bar code or account number from
qualifying for the exclusion. For
example, a retailer may generate a bar
code on a paper certificate at the time
of purchase that enables the retailer to
scan the certificate and maintain a
record of the certificate electronically,
rather than enter the information in a
ledger. Because the bar code is issued to
the consumer solely in paper form, the
certificate qualifies for the exclusion.
Similarly, a consumer may prepay for
an item or service and receive a paper
receipt with a numerical code that can
for example, be used to access a car
wash or entered into an electronic
parking meter. The receipt bearing the
code qualifies for the exclusion for
cards, codes, or other devices issued in
paper form only.
New comment 20(b)(5)–2 contains
positive and negative examples
illustrating the exclusion for cards,
codes, or other devices issued in paper
form only.
20(b)(6) Redeemable Solely for
Admission to Events or Venues
Section 205.20(b)(6) excludes cards,
codes, or other devices that are
redeemable solely for admission to
events or venues at a particular location
or group of affiliated locations, or to
obtain goods or services, in conjunction
with such admission, at the event or
venue, or at specific locations affiliated
with and in geographic proximity to the
event or venue. See EFTA Section
915(a)(2)(D)(vi); 15 U.S.C.
1693m(a)(2)(D)(vi). The Board did not
receive any comments on this exclusion,
and it is adopted as proposed.
As clarified in comment 20(b)(6)–1,
the exclusion in § 205.20(b)(6) is
generally limited to cards, codes, or
other devices that do not state a specific
monetary value but instead are
redeemable for an admission to an event
or venue, such as a ticket to a sporting
event or a pass to enter an amusement
park.26 In addition, the exclusion
applies to cards, codes, or other devices
that entitle the consumer to obtain
goods or services, in conjunction with
admission to an event or venue. See
EFTA Section 915(a)(2)(D)(vi); 15 U.S.C.
1693m(a)(2)(D)(vi). For example, the
consumer might purchase a certificate
or card that entitles the recipient to one
26 Such cards, codes, or other devices are also not
covered by the rule because they are not issued in
a specified amount. See comment 20(a)–3.

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ticket to an amusement park plus a
dollar amount that can be spent on
concessions at the park. Consistent with
the statute, the exclusion in
§ 205.20(b)(6) also covers circumstances
where the consumer may obtain goods
or services at specific locations affiliated
with and in geographic proximity to the
event or venue in conjunction with
admission. For example, a certificate or
card may enable the consumer to gain
admission to an amusement park and to
obtain a souvenir of the occasion at a
retailer affiliated with the park located
within or near the park.
While the exclusion applies to cards,
codes, or other devices that are
redeemable for admission to an event or
venue, and for goods or services
purchased in conjunction with that
admission, the exclusion does not cover
cards, codes, or other devices issued in
a specified monetary value that could be
applied toward such admission. For
example, a merchant affiliated with an
amusement park could issue a $25 gift
card to a consumer that can be
redeemed by the recipient to purchase
goods at any of the merchant’s retail
outlets and its on-line store. Under the
terms of the prepaid card program,
however, the merchant could also allow
the card to be provided as a form of
payment to purchase tickets at the
amusement park.
Permitting the exclusion to apply in
these circumstances would create
opportunities for circumvention because
an issuer could simply list the purchase
of tickets at the amusement park as one
of several permitted uses of a gift card
to avoid the consumer protections
provided by the Credit Card Act.
Accordingly, the final rule does not
apply the exclusion to a card that can
be redeemed in a specified amount
towards admission to an event or venue.
This approach is consistent with the
statutory exclusion, which refers to
cards, codes, or other devices that are
redeemable solely for admission to
events or venues at a particular location
or group of affiliated locations. See
EFTA Section 915(a)(2)(D)(vi); 15 U.S.C.
1693m(a)(2)(D)(vi).27
Comment 20(b)(6)–1 explains the
exclusion in § 205.20(b)(6). Comment
20(b)(6)–2 (proposed as comment
20(b)(6)–1) provides examples to
illustrate the exclusion. The comment
27 While the exclusion in § 205.20(b)(6) does not
apply to other payment devices that are redeemable
for a specified product or service, other than
admission to an event or venue, such as a certificate
or card that is redeemable for a spa treatment or
hotel stay, the devices may nevertheless fall outside
the scope of § 205.20 if they are not issued in a
specified dollar amount. See comment 20(b)–3.
Other exclusions in the rule may also apply to such
devices. See, e.g., § 205.20(b)(3).

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and examples contained therein have
been revised to reflect changes or
additions elsewhere in the final rule. In
addition, the examples in proposed
comment 20(b)(6)–2.iv and .v have been
deleted in light of the prior discussion
regarding cards, codes, or other devices
that are not issued in a specified
amount. See, e.g., comment 20(b)–3.
20(c) Form of Disclosures
Section 205.20(c) sets forth the
general disclosure requirements that
apply to gift certificates, store gift cards,
and general-use prepaid cards,
including provisions relating to the form
of disclosures.
20(c)(1) Clear and Conspicuous
Proposed § 205.20(c)(1) implemented
the clear and conspicuous standard
required by EFTA Sections 915(b)(3)(A)
and (c)(2)(B). See 15 U.S.C.
1693m(b)(2)(A) and (c)(2)(B). These
statutory provisions require that a
dormancy fee, inactivity charge or fee,
or service fee and the terms of
expiration, discussed in proposed
§§ 205.20(d) and (e), must be disclosed
clearly and conspicuously. In addition,
the Board proposed that the clear and
conspicuous standard would also apply
to the disclosures in proposed
§ 205.20(f). Commenters agreed with the
requirement to apply the clear and
conspicuous standard to all disclosures
required under § 205.20. Accordingly,
section § 205.20(c)(1) is adopted
substantially as proposed.28
Proposed comment 20(c)(1)–1
clarified the meaning of the term ‘‘clear
and conspicuous.’’ Specifically the
proposed comment explained that
disclosures would be clear and
conspicuous for the purposes of this
section if they are readily
understandable and, in the case of
written and electronic disclosures, the
location and type size are readily
noticeable to consumers. Except as
otherwise required, disclosures would
not need to be located on the front of the
certificate or card to be considered clear
and conspicuous. Under the proposed
comment, disclosures would be clear
and conspicuous if they are in a print
that contrasts with and is otherwise not
obstructed by the background on which
they are printed. For example,
disclosures on a card or computer
screen would not likely be conspicuous
if obscured by a logo printed in the
background. Similarly, a disclosure on
28 Because the clear and conspicuous requirement
applies to all disclosures provided under this
section, disclosures provided in connection with
loyalty, award, or promotional gift cards under
§ 205.20(a)(4)(iii) must also be clear and
conspicuous.

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the back of a card that is printed on top
of indentations from embossed type on
the front of the card would not likely be
conspicuous if the indentations obstruct
the readability of the disclosure. The
proposed comment clarified that oral
disclosures, to the extent permitted,
would meet the clear and conspicuous
standard when they are given at a
volume and speed sufficient for a
consumer to hear and comprehend
them. Commenters generally agreed that
the proposed clear and conspicuous
requirements were appropriate.
The November 2009 Proposed Rule
did not include a specific type size or
prominence requirement, except where
otherwise noted. See proposed
§ 205.20(e)(3)(iii). The Board requested
comment on whether a description of
the clear and conspicuous standard in
the final rule should include a type size
or prominence requirement for all
disclosures and, if so, what standard
would be appropriate. The Board also
requested comment on whether there
were alternatives to a type size or
prominence requirement that could
ensure that disclosures on a card are
clear and conspicuous to a consumer.
One commenter, a city government
entity, believed the Board should
require on-card disclosures in a 10-point
type size and also impose font and type
size requirements for on-line
disclosures. Industry commenters,
however, objected to adding a font or
type size requirement. These
commenters believed that issuers
should have flexibility to tailor
disclosures to specific certificates or
cards and that it was not necessary to
impose font or type size requirements to
provide clear and conspicuous
disclosures.
The Board believes that applying a
prominence requirement or a minimum
type size standard to every disclosure
on a certificate or card is impractical.
The Board believes it would be difficult
to determine a type size standard that
would be appropriate for all certificate
or card programs, because the required
disclosures on a certificate or card will
vary depending upon the terms of the
certificate or card. Moreover, particular
features of a certificate or card, and
perhaps the size of the certificate or
card, may affect the type size of
disclosures that could fit within the
limited amount of space on the
certificate or card. For example, a
person making disclosures on a card
with embossed type on the front of the
card may need to adjust the type size to
prevent the indentations from
obstructing the readability of the
disclosures. Thus, the final rule does
not include a specific type size or

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prominence requirement. Comment
20(c)(1)–1 is adopted substantively as
proposed.
Proposed § 205.20(c)(1) stated that the
disclosures required by this section
could contain commonly accepted or
readily understandable abbreviations or
symbols. Proposed comment 20(c)(1)–2
provided illustrative examples, stating
that the use of abbreviations and
symbols such as ‘‘mo.’’ for month or a
‘‘/’’ to indicate ‘‘per’’ would be
permissible. The proposed comment
noted that it is sufficient under the clear
and conspicuous standard to state, for
example, that a particular fee is charged
‘‘$2.50/mo. after 12 mos.’’ Commenters
generally agreed with proposed
comment 20(c)(1)–2. Accordingly,
comment 20(c)(1)–2 is adopted as
proposed.

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20(c)(2) Format
Proposed § 205.20(c)(2) stated that
disclosures required by this section
generally would be required to be
provided to the consumer in written or
electronic form. Because the disclosures
would not be required to be in written
form, proposed comment 20(c)(2)–1
clarified that electronic disclosures
made under this section would not be
subject to compliance with the
consumer consent and other applicable
provisions of the Electronic Signatures
in Global and National Commerce Act
(E-Sign Act) (15 U.S.C. 7001 et seq.),
which only applies when information is
required to be provided to a consumer
in writing. The proposed comment
clarified that electronic disclosures
could not be provided through a
hyperlink or in another manner by
which the purchaser can bypass the
disclosure. Under the proposed rule, the
Board stated that an issuer or vendor
would not be required to confirm that
the consumer has read the electronic
disclosures.
Several industry commenters agreed
with the clarification that electronic
disclosures provided under § 205.20
would not be subject to compliance
with the consumer consent and other
applicable provisions of the E-Sign Act.
One city government entity commenter
believed the Board should require the
issuer to confirm that the consumer has
read the electronic disclosures. The
Board believes requiring confirmation
that a consumer has read the disclosures
would be impractical. For example, it
would be difficult to confirm that a
consumer has read disclosures on a
code or confirmation that is
electronically mailed to a consumer
because the transaction has already been
completed.

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Section 205.20(c)(2) and comment
20(c)(2)–1 are generally adopted as
proposed, with revisions. Upon the
Board’s further analysis, the final rule
requires that certain disclosures must
also be in a form that a consumer could
keep so consumers can retain them for
later review if necessary. Therefore,
section 205.20(c)(2) in the final rule
provides that written and electronic
disclosures must be in a retainable form.
Comment 20(c)(2)–1 provides an
example that clarifies how a person
could fulfill this requirement in the
context of electronic disclosures. The
comment provides that a person may
satisfy the requirement if it provides an
on-line disclosure in a format that is
capable of being printed. Comment
20(c)(2)–1 in the final rule also makes
non-substantive wording modifications,
for consistency.
Proposed § 205.20(c)(2) stated that
only disclosures provided under
§ 205.20(c)(3) may be provided orally.
The Board stated in the supplementary
information to the proposal that
permitting oral disclosures is necessary
in limited circumstances where
disclosures cannot be made prior to
purchase unless made orally, such as
when a certificate or card is purchased
by telephone. Though disclosures
required to be made prior to purchase
could be made orally, the proposed rule
would still require written or electronic
disclosures to be provided on or with
the certificate or card. See proposed
§§ 205.20(d)(2), (e)(3), and (f).29
Commenters generally agreed with this
provision in proposed § 205.20(c)(2),
and it is adopted as proposed.
Some industry commenters asked the
Board to clarify how a person could
fulfill the requirement in
§ 205.20(e)(3)(iii) to make clarifying
statements regarding funds expiration
‘‘in close proximity’’ to the card
expiration date, if such disclosures are
made orally. As discussed below, the
Board has clarified in comment 20(e)–7
that the ‘‘close proximity’’ requirement
does not apply to oral disclosures made
pursuant to this section.
Proposed comment 20(c)(2)–2
addressed disclosure requirements in
circumstances where no physical
certificate or card is issued. This
comment has been removed in the final
rule. Instead, the disclosure
requirements applicable to non-physical
certificates or cards are discussed under
29 Because the requirement applies to all
disclosures under this section other than those
provided under § 205.20(c)(3), disclosures provided
in connection with loyalty, award, or promotional
gift cards under § 205.20(a)(4)(iii) must also be
written or electronic.

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§§ 205.20(c)(3) and (c)(4) and their
respective commentaries.
20(c)(3) Disclosures Prior to Purchase
Proposed § 205.20(c)(3) provided that
disclosures for dormancy, inactivity, or
service fees required under
§ 205.20(d)(2) must be made prior to the
purchase of the certificate or card. See
EFTA Section 915(b)(3)(B); 15 U.S.C.
1693m(b)(3)(B). The Board also
proposed in § 205.20(c)(3) to apply the
requirement that disclosures be made
prior to purchase of the certificate or
card to the disclosure of additional fees
imposed in connection with a certificate
or card and the terms and conditions of
expiration of the funds, using its
authority under EFTA Section 904. See
proposed §§ 205.20(e)(3) and (f)(1),
discussed below. Proposed comment
20(c)(3)–1 clarified that the disclosures
required under this paragraph must be
provided regardless of whether the
certificate or card is purchased in
person, on-line, by telephone, or by
other means.
Some industry commenters believed
that those disclosures required to be
made prior to purchase would be
redundant, because the same
disclosures also would be required to be
made on or with the card. However, a
consumer group commenter and a city
government entity commenter
supported the requirement to provide
these disclosures to consumers prior to
purchase. The city government entity
commenter believed that merchants that
sell gift cards should also be required to
post signage at the point of sale with gift
cards’ terms and conditions.
The Board believes that consumers
contemplating the purchase of a
certificate or card should be provided
information about all fees and the terms
and conditions of expiration before
purchasing a certificate or card. Even if
the purchaser is not the ultimate user of
the certificate or card, a purchaser
should be aware of any potential costs
to the recipient and the amount of time
the recipient has to use the funds
underlying the certificate or card. The
final rule does not separately require
signage with gift cards’ terms and
conditions at the point of sale in
addition to the disclosures provided on
or with the certificate or card itself.
Such a requirement could be
impractical because a merchant may sell
many different certificates or cards that
each have different terms. Posting
signage that discloses different terms for
different cards could confuse consumers
who may not know which disclosures
apply to the certificate or card that they
want to purchase.

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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Rules and Regulations
For the foregoing reasons,
§ 205.20(c)(3) is adopted as proposed,
with some revisions. One industry
commenter requested that the Board
clarify in the final rule that an issuer
may modify the terms of the certificate
or card after purchase, so long as the
modifications are disclosed to the
consumer. The Board believes
permitting the modification of fees and
terms and conditions of expiration for
certificates or cards would be
problematic because many certificates
or cards are issued without obtaining
the name or other information about the
consumer. Moreover, the certificate or
card may be given to another consumer
after purchase. In such cases, it would
be difficult to inform consumers that
fees and terms and conditions of
expiration for a certificate or card have
changed, because the issuer would not
have the consumer’s contact
information. Moreover, permitting an
issuer to change the fees and terms and
conditions of expiration for a certificate
or card after purchase would undermine
the purpose of disclosing those fees and
terms of expiration prior to purchase.
Consumers would be unable to rely on
the fees and terms and conditions of
expiration disclosed on different
certificates or cards when comparing
products. Therefore, § 205.20(c)(3)
provides that fees and terms and
conditions of expiration that are
required to be disclosed prior to
purchase may not be changed after
purchase. The Board has also modified
§ 205.20(c)(3) to clarify that an issuer or
vendor, as referenced in EFTA Section
915(b)(3)(B), is a person that issues or
sells a certificate or card to a consumer.
Comment 20(c)(3)–1 is adopted
substantively as proposed. The Board
also added two comments in the final
rule to clarify § 205.20(c)(3). Comment
20(c)(3)–2 clarifies how disclosures
required under § 205.20(c)(3) may be
provided electronically to the consumer
prior to purchase. For certificates or
cards purchased electronically,
disclosures made to a consumer after
the consumer has initiated an on-line
purchase of a certificate or card, but
prior to completing the purchase of the
certificate or card, would satisfy the
prior-to-purchase requirement.
However, electronic disclosures made
available on a person’s Web site that
may or may not be accessed by the
consumer are not provided to the
consumer and therefore would not
satisfy the prior-to-purchase
requirement.
Comment 20(c)(3)–3 clarifies how
disclosures for non-physical certificates
and cards may be provided prior to
purchase. If no physical certificate or

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card is issued, the disclosures must be
provided to the consumer before the
certificate or card is purchased. For
example, where a gift certificate or card
is a code that is provided by telephone,
the required disclosures may be
provided orally prior to purchase.
20(c)(4) Disclosures on the Certificate or
Card
The Board proposed that certain
disclosures regarding dormancy,
inactivity, or service fees be provided on
the certificate or card, consistent with
the requirements of EFTA Section
915(b)(3)(A). See proposed
§ 205.20(d)(2). The Board also proposed
that the terms and conditions of
expiration of the funds must be on the
certificate or card itself. See proposed
§ 205.20(e)(3)(i). In addition, the Board
proposed that certain additional
disclosures not specified in the statute
must also be on the certificate or card
itself. Specifically, under the proposal,
the following disclosures would have to
be on the certificate or card itself: a tollfree telephone number a consumer may
call for fee information or replacement
certificates or cards (§§ 205.20(e)(3)(ii)
and (f)(2)); a Web site a consumer may
access for fee information or
replacement certificates or cards, if one
is maintained (§§ 205.20(e)(3)(ii) and
(f)(2)); a disclosure that the certificate or
card expires, but the underlying funds
either do not expire or expire later than
the certificate or card
(§ 205.20(e)(3)(iii)); and the fact that the
consumer may contact the issuer for a
replacement card, if applicable
(§ 205.20(e)(3)(iii)).
Proposed § 205.20(c)(4) implemented
the requirement that certain disclosures
under § 205.20 be provided on the
certificate or card itself. Proposed
§ 205.20(c)(4) stated that a disclosure
made in an accompanying terms and
conditions document, on packaging, or
on a sticker or other label affixed to the
certificate or card does not constitute a
disclosure on the certificate or card.
Some industry commenters urged the
Board to limit the number of disclosures
required to be on the certificate or card
itself. These commenters argued that
requiring additional disclosures to be on
the certificate or card itself would
impede consumer comprehension
because there may be numerous
disclosures required to fit within a
limited amount of space on the
certificate or card. Some commenters
suggested that the Board only require
contact information where a consumer
could obtain fee and other information.
Commenters also suggested permitting
disclosures on packaging, on a
disclosure that accompanies the card, or

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on a sticker affixed to the certificate or
card, instead of on the certificate or card
itself. Several commenters requested
that the Board issue model forms in card
size that illustrate compliance with the
‘‘on the card’’ disclosure requirement.
The Board recognizes that the amount
of space in which to make disclosures
on a standard sized certificate or card is
limited. However, the Credit Card Act
requires that certain disclosures
regarding dormancy, inactivity, or
service fees must be provided on the
certificate or card. See EFTA Section
915(b)(3)(A); 15 U.S.C. 1693m(b)(3)(A).
In addition, the Board believes that it is
necessary to make the disclosures set
forth in §§ 205.20(e)(3) and (f)(2) on the
certificate or card itself to provide
adequate and effective disclosure of key
terms. Such disclosures would not be
sufficient on packaging or a sticker
affixed to the certificate or card, because
the purchaser of the certificate or card
may not be the user of the certificate or
card and packaging or a sticker may be
removed before a certificate or card is
given to the user. The Board believes
requiring the disclosures on the
certificate or card itself ensures that the
gift recipient receives these additional
disclosures and will always have access
to them, because they cannot be
separated from the certificate or card.
The Board has provided issuers
flexibility to tailor disclosures so that
they fit on a particular certificate or
card. Issuers may comply with the
requirement to make disclosures on the
certificate or card in a manner
appropriate to a product, so long as the
disclosures are clear and conspicuous.
For example, issuers may be able to
adjust type size and placement of
disclosures to fulfill the disclosure
requirements without disrupting the
placement of an existing logo or
magnetic stripe. Because the type and
number of required disclosures will
vary depending on a particular
certificate or card, the Board believes it
is not possible to provide a model
certificate or card that would apply to
every certificate and card subject to the
final rule.
Therefore, § 205.20(c)(4) is adopted as
proposed, with some revisions. The
Board has added language to
§ 205.20(c)(4) to reflect the fact that the
provision also applies to disclosures
that must appear on a loyalty, award, or
promotional gift card under
§ 205.20(a)(4)(iii). The paragraph also
clarifies how disclosures required on
the certificate or card may be provided
for certificates and cards provided
electronically or orally. The final rule
provides that, for an electronic
certificate or card, disclosures must be

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provided electronically on the
certificate or card provided to the
consumer. An issuer that provides a
code or confirmation to a consumer
orally must provide to the consumer a
written or electronic copy of the code or
confirmation promptly, and the
applicable disclosures must be provided
on the written copy of the code or
confirmation. The final rule further
clarifies the treatment of non-physical
certificates and cards by adding
comment 20(c)(4)–1. The comment
clarifies that if no physical certificate or
card is issued, the disclosures required
by § 205.20(c)(4) must be disclosed on
the code, confirmation, or other written
or electronic document provided to the
consumer. For example, where a gift
certificate or card is a code or
confirmation that is provided to a
consumer on-line or sent to a
consumer’s e-mail address, the required
disclosures may be provided
electronically on the same document as
the code or confirmation.
Some industry commenters also
suggested that the Board exclude any
non-plastic cards, codes, or devices
from the requirement to provide
disclosures on the certificate or card.
These commenters believed that
disclosure on such devices, such as
contactless stickers that can be placed
on objects such as mobile phones,
would be impossible and that the Board
should instead permit the disclosures to
be made on the packaging. Other
industry commenters believed that the
required disclosures could not fit on
certain small form devices, such as
plastic cards that are smaller than the
standard gift card.
The Board believes that consumers of
gift certificates, store gift cards or
general-use prepaid cards should be
given the protections provided under
the Act, regardless of the form of the
certificate or card. The Board agrees that
certain devices may be issued in a form
that is not conducive to providing fully
compliant disclosures. Therefore, in the
final rule, the Board has added
comment 20(c)(4)–2 to clarify that a
person may issue or sell a supplemental
gift card that is smaller than a standard
size and that does not bear the
applicable disclosures if it is
accompanied by a fully compliant
certificate or card.
20(d) Prohibition on Imposition of Fees
or Charges
Section 205.20(d) implements the
statute’s restrictions on imposing
dormancy, inactivity, or service fees.
See EFTA Sections 915(b)(1), (b)(2), and
(b)(3); 15 U.S.C. 1693m(b)(1), (2), and
(3). Proposed § 205.20(d) generally

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followed the statutory language with
non-substantive wording and
organizational changes, and is adopted
as proposed.
Proposed § 205.20(d) prohibited the
imposition of a dormancy, inactivity, or
service fee with respect to a gift
certificate, store gift card or general-use
prepaid card unless: (a) There has been
no activity for the one-year period
ending on the day the charge is
imposed; (b) certain disclosure
requirements have been met; and (c)
only one such fee is charged in any
given calendar month. Regarding
disclosures, proposed § 205.20(d)
provided that before a dormancy,
inactivity, or service fee may be
imposed, a certificate or card must
clearly and conspicuously disclose: (a)
That a dormancy, inactivity, or service
fee may be charged; (b) the amount of
the fee; (c) how often such fee or charge
may be assessed; and (d) that such fee
or charge may be assessed for inactivity.
Most commenters did not object to the
text of proposed § 205.20(d). A few
industry commenters suggested,
however, that the restriction in
§ 205.20(d)(3) should apply to one type
of fee per month. These commenters
argued that this interpretation would be
consistent with the legislative history of
the Credit Card Act and certain state
laws. The Board disagrees. The statute
specifically provides that ‘‘not more
than one [dormancy, inactivity, or
service] fee may be charged in any given
month.’’ See EFTA Section 915(b)(2)(C);
15 U.S.C. 1693m(b)(2)(C). The Board
believes that the better reading of this
statutory provision is that only one fee
may be charged in a given month and
not that only one of each type of fee may
be charged in a given month.
Some industry commenters
recommended that the Board provide
alternatives for disclosing service fees
on a gift certificate, store gift card, or
general-use prepaid card under
§ 205.20(d)(2). For example, one
industry commenter suggested that the
Board permit disclosure of a range of all
fees that could be imposed, rather than
listing the amounts for each fee.
However, the Board believes that
permitting such alternative disclosures
would not be consistent with the statute
and would not provide clear disclosures
to consumers. Accordingly, § 205.20(d)
is adopted as proposed.30
30 As discussed in the November 2009 Proposed
Rule, the Board did not propose to separately
implement the statutory exclusion from the
dormancy, inactivity, or service fee restrictions for
gift certificates distributed pursuant to an award,
loyalty, or promotional program and with respect to
which there is no money or other value exchanged.
See EFTA Section 915(b)(4). The Board believes this

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The Board proposed several
comments to clarify the provisions in
§ 205.20(d). Proposed comment 20(d)–1
provided examples of how to determine
when a dormancy, inactivity, or service
fee may be imposed. The Board did not
receive any comments on proposed
comment 20(d)–1, and the comment is
adopted largely as proposed, with minor
clarifying amendments. The Board has
also eliminated the proposed example
concerning the determination of a oneyear period when a fee is charged on
February 29 of a leap year. The Board
believes the other examples are
sufficient to provide guidance to issuers.
Proposed comment 20(d)–2 elaborated
on the meaning of ‘‘activity’’ for
purposes of proposed § 205.20(d)(1). For
organizational purposes, the Board has
moved the substance of this comment to
§ 205.20(a)(7) and comment 20(a)(7)–1,
discussed above. Consequently, the
Board is renumbering proposed
comments 20(d)–3 through 20(d)–5.
Proposed comment 20(d)–3 clarified
the interaction between the disclosure
requirements of proposed
§§ 205.20(d)(2) and (c)(3). Specifically,
the proposed comment provided that
depending on the context, a single
disclosure regarding dormancy,
inactivity, or service fees that meets the
clear and conspicuous requirement may
satisfy both the requirement in
§ 205.20(d)(2) that the disclosures be
provided on the certificate or card and
the requirement in § 205.20(c)(3) that
the disclosures be provided prior to
purchase. For example, if the
disclosures on a certificate or card,
required by § 205.20(d)(2), are visible to
the consumer without having to remove
packaging or other materials sold with
the certificate or card for a purchase
made in person, the disclosures would
also meet the requirements of
§ 205.20(c)(3). If, however, the
disclosure would not meet the
requirements of both §§ 205.20(d)(2) and
(c)(3), proposed comment 20(d)–3 stated
that a dormancy, inactivity, or service
fee may need to be disclosed multiple
times to satisfy the requirements of
proposed §§ 205.20(d)(2) and (c)(3). For
example, if the disclosures on a
certificate or card, required by
§ 205.20(d)(2), are obstructed by
packaging sold with the certificate or
card for a purchase made in person,
they would also be required to be
disclosed on the packaging sold with
the certificate or card to meet the
requirements of § 205.20(c)(3).
exclusion is effectively implemented through the
definition of ‘‘gift certificate’’ in § 205.20(a)(1)(i) and
the exclusion in § 205.20(b)(3) for loyalty, award, or
promotional gift cards.

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The city government entity
commenter asserted that disclosures on
a certificate or card that are visible to
the consumer prior to purchase should
not be deemed disclosed prior to
purchase, because disclosures on a card
may be smaller than disclosures
displayed on signage or packaging. The
Board continues to believe that so long
as disclosures on a certificate or card are
clear and conspicuous, the requirement
to make disclosures prior to purchase is
satisfied if the disclosures are visible to
the consumer. Therefore, proposed
comment 20(d)–3, renumbered as
comment 20(d)–2 in the final rule, is
adopted substantively as proposed, with
minor revisions for clarity.
Proposed comment 20(d)–4 clarified
that in addition to the disclosures
required under § 205.20(d)(2), any
applicable disclosures under
§§ 205.20(e)(3) and (f)(2) of this section
must also be provided on the certificate
or card. As discussed above, the Board
believes that it is appropriate to require
fee disclosures on the certificate or card
itself, in addition to other applicable
disclosures. Proposed comment 20(d)–4,
renumbered as comment 20(d)–3 in the
final rule, is therefore adopted as
proposed.
Proposed comment 20(d)–5 clarified
the prohibition in § 205.20(d)(3) against
charging more than one dormancy,
inactivity, or service fee in any given
calendar month, with examples. The
Board did not receive comment on
proposed comment 20(d)–5, which is
adopted as comment 20(d)–4 in the final
rule with minor clarifying amendments.
Finally, the Board is adding a new
comment 20(d)–5 to clarify that
§ 205.20(d) prohibits any person from
accumulating or combining dormancy,
inactivity, or service fees for previous
periods into a single fee because such a
practice would circumvent the
limitation in § 205.20(d)(3) that only one
fee may be charged per month.
Specifically, this comment provides that
an issuer may not retroactively impose
fees on a consumer for prior months
through a single fee assessed following
a one-year period of inactivity. See, e.g.,
U.S. Federal Trade Commission
Complaint, In the Matter of Kmart
Corporation, et al., Docket No. C–4197.
(Aug. 14, 2007). Comment 20(d)–5
contains an example to illustrate this
prohibition.
20(e) Prohibition on Sale of Gift
Certificates or Cards With Expiration
Dates
EFTA Section 915(c) prohibits the
sale of a gift certificate, store gift card,
or general-use prepaid card subject to an
expiration date unless: (a) the expiration

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date is not earlier than five years after
the date on which a gift certificate was
issued, or the date on which card funds
were last loaded to a store gift card or
general-use prepaid card; and (b) the
terms of expiration are clearly and
conspicuously stated. See 15 U.S.C.
1693m(c). The Board proposed
§ 205.20(e) to implement EFTA Section
915(c).
Application of EFTA Section 915(c) to
Funds Expiration
As the Board discussed in the
November 2009 Proposed Rule, EFTA
Section 915(c) does not specify whether
the restrictions apply to the expiration
of the certificate or card itself or the
underlying funds. See 15 U.S.C.
1693m(c). Proposed § 205.20(e)(2)
would have required that the expiration
date of the underlying funds be at least
the later of: (a) Five years from the date
the gift certificate was issued, or the
date on which funds were last loaded to
a store gift card or general-use prepaid
card; or (b) the certificate or card
expiration date.
Both consumer group and industry
commenters agreed that the Board
should apply the protections of EFTA
Section 915(c) to the underlying funds.
One industry commenter noted that if a
certificate or card were replaced because
the certificate or card had expired but
the underlying funds were still valid,
the funds should not be required to be
valid from the date the replacement
certificate or card is issued. Instead, the
commenter believed that the five years
should be measured from the date the
certificate was first issued or the card
was last loaded. The Board believes that
this commenter’s observation is
consistent with the statute.
Accordingly, the Board is amending
§ 205.20(e)(2) with respect to gift
certificates to state that the expiration
date of the underlying funds must be at
least the later of: (a) Five years from the
date the gift certificate was initially
issued, or (b) the certificate expiration
date. In addition, with respect to store
gift cards and general-use prepaid cards,
the Board is adding a new comment
20(e)–2 in part to clarify that for
purposes of determining the minimum
expiration date under § 205.20(e)(2),
funds are not considered to be loaded to
a store gift card or general-use prepaid
card solely because a replacement card
has been issued or activated for use. As
a result, issuers are not required to
restart the five-year period in
§ 205.20(e)(2) when a replacement card
is issued or activated.

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16603

Certificate or Card Expiration
Consumers may be confused about
expiration dates because the expiration
date for the certificate or card will differ
from the expiration date for the
underlying funds for many general-use
prepaid cards, and perhaps some gift
certificates and store gift cards. The
Board proposed two alternative
approaches in § 205.20(e)(1) to address
potential consumer confusion about the
certificate or card expiration date and
the funds expiration date.
Under proposed Alternative A, a
person could not sell a gift certificate,
store gift card, or general-use prepaid
card subject to an expiration date unless
the certificate or card expiration date is
at least five years after the date the
certificate or card is sold or issued to a
consumer. Under proposed Alternative
B, persons that issue or sell a certificate
or card would be required to adopt
policies and procedures to ensure that a
consumer will have a reasonable
opportunity to purchase a certificate or
card with at least five years remaining
until the certificate or card expiration
date. The Board solicited comment on
whether it should consider adopting
Alternative B for a transitional period
and adopt Alternative A as of a
subsequent date in order to provide
more time to implement Alternative A.
Commenters were divided on whether
the Board should adopt Alternative A or
Alternative B. Consumer group
commenters and some industry
commenters recommended that the
Board adopt Alternative A because it is
a precise and straightforward rule with
less risk of misinterpretation or
misapplication than Alternative B.
Some of these commenters further
suggested that if Alternative A were
adopted, the need for disclosures to
distinguish the certificate or card
expiration date from the funds
expiration date would no longer be
necessary.
Several industry commenters
supported Alternative B either as a
transitional rule or as a permanent
solution. Other industry commenters
suggested that Alternative B should be
provided as an option in addition to
Alternative A. Commenters that
generally favored Alternative B believed
that Alternative B would provide for
greater flexibility. In addition, several
issuers commented that because the
ability to comply with Alternative A
relies almost exclusively on the sellers’
ability to prevent the sale of a certificate
or card that has less than five years
remaining on the certificate or card
expiration date, issuers may not have
any control over these procedures.

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Furthermore, commenters noted that the
costs of implementing a more precise
rule under Alternative A may not be
warranted given that the vast majority of
certificate and card users fully expend
the underlying funds within a few years.
The Board believes that given the
various entities involved in distributing
a gift certificate, store gift card, or
general-use prepaid card for sale and the
operational challenges associated with
implementing Alternative A, flexibility
is warranted with respect to making
certificates and cards available for sale
with expiration dates that are closely
aligned with, but not necessarily
identical to, the funds expiration date.
Therefore, the Board is adopting
Alternative B of § 205.20(e)(1)
substantively as proposed, with minor
wording changes. However, persons that
follow Alternative A are deemed to have
adopted policies and procedures
consistent with Alternative B. See
comment 20(e)–1.i.
In adopting Alternative B, the Board
recognizes that not all sellers, issuers,
and distributors may be in a position to
implement Alternative A without
considerable costs and systems changes.
For example, Alternative A may require
programming and perhaps hardware
changes at point-of-sale, to prevent a
certificate or card from being sold with
less than five years remaining before the
certificate or card expiration date.
Furthermore, the Board understands
that a significant number of consumers
spend down the funds underlying gift
certificates, store gift cards, and generaluse prepaid cards within a few years.
Therefore, the Board believes that
Alternative A is not necessary to ensure
that the vast majority of certificate or
cards will not be prematurely discarded
while funds still remain valid. For the
small number of consumers who retain
certificates or cards that expire before
their funds, the Board believes the other
requirements in § 205.20(e) will be
sufficient to ensure these consumers
have the benefit of the funds for the
minimum time the statute requires.
Proposed comment 20(e)–1 under
Alternative B set forth both positive and
negative examples of providing
consumers a reasonable opportunity to
purchase a certificate or card with at
least five years remaining until the
certificate or card expiration date. The
Board did not receive any significant
comment on these examples. However,
the Board is amending comment 20(e)–
1 for clarity by eliminating the examples
and by specifying two ways in which
the reasonable opportunity standard
may be met. Specifically, comment
20(e)–1 provides that consumers are
deemed to have a reasonable

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opportunity to purchase a certificate or
card with at least five years remaining
until the certificate or card expiration
date if the certificate or card is available
for purchase by a consumer with at least
five years and six months before the
certificate or card expiration date.
Furthermore, as discussed above, the
Board believes that compliance with
Alternative A is a means of complying
with Alternative B. Therefore, comment
20(e)–1 states that consumers are
deemed to have a reasonable
opportunity to purchase a certificate or
card with at least five years remaining
until the certificate or card expiration
date if there are policies and procedures
in place to prevent the sale of a
certificate or card unless the certificate
or card expiration date is at least five
years after the date the certificate or
card was sold or issued to a consumer.
Although Alternative B may
adequately address potential consumer
confusion regarding expiration dates
with respect to non-reloadable cards,
such protections may not be sufficient
for reloadable cards where the funds
expiration date changes each time the
card is reloaded. The Board is
addressing this issue by requiring
certain disclosures related to the
expiration of the underlying funds, as
discussed more fully below in the
supplementary information to
§ 205.20(e)(3). However, the Board
requested comment on whether it
should require issuers to automatically
issue a replacement card to consumers
prior to the card expiration date of a
reloadable card if the underlying funds
will not expire until after the card
expiration date.
Several industry commenters opposed
such a requirement, noting that since
the rule is intended to cover gift cards,
the person that purchases the card often
is not the person ultimately using the
card. Therefore, it may not be practical
for issuers or sellers of reloadable cards
to collect the name and address of the
ultimate user at point of sale because
the purchaser may not be in a position
to provide this information.
Furthermore, commenters stated that if
a consumer does not notify the gift card
issuer of a change in address, the issuer
may not have a reliable current address
to which it could send a replacement
card. Given these operational
complexities, the final rule does not
require issuers to automatically replace
expired reloadable cards.
Finally, the Board is adopting new
comment 20(e)–2, in part, to incorporate
a suggestion from an industry
commenter regarding replacement
certificates or cards, which are generally
subject to all provisions in § 205.20,

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including disclosure requirements. This
comment explains that because
§ 205.20(e)(1) requires issuers and
sellers to have reasonable policies and
procedures in place to provide a
reasonable opportunity for a consumer
to purchase a certificate or card with at
least five years before the certificate or
card expiration date, the provision does
not apply to the issuance of a
replacement certificate or card.
Replacement certificates or cards may
therefore have shorter expiration dates.
If the certificate or card expiration date
for a replacement certificate or card is
later than the date set forth in
§ 205.20(e)(2)(i), then pursuant to
§ 205.20(e)(2), the expiration date for the
underlying funds at the time the
replacement certificate or card is issued
must be no earlier than the expiration
date for the replacement certificate or
card.
For example, if a consumer purchases
a non-reloadable general-use prepaid
card with five years before the card
expires and seven years before the
underlying funds expire, the
replacement card may have a card
expiration date that is less than five
years to correspond to the expiration
date of the underlying funds. However,
if the replacement card expiration date
is later than the original seven-year
expiration date of the underlying funds,
the underlying funds expiration date
must at a minimum match the
replacement card expiration date.
Disclosures Related to Certificate or
Card Expiration and Funds Expiration
Proposed § 205.20(e)(3) provided that
three disclosures were required to be
stated on the certificate or card, as
applicable. First, proposed
§ 205.20(e)(3)(i) provided that the
disclosures must state the expiration
date for the underlying funds or, if the
underlying funds do not expire, that
fact. In some instances, the exact
expiration date of the underlying funds
may not be able to be determined. For
example, in the case of reloadable cards,
the funds expiration date is determined
by the date the consumer last loaded
funds onto the card. As a result, the
funds expiration date adjusts each time
the consumer reloads the card. For
example, if a consumer purchases a
reloadable card on January 15, 2012, the
funds may expire on or after January 15,
2017. However, if a consumer loads
more funds onto the card on July 15,
2014, the funds may not expire until on
or after July 15, 2019. To accommodate
this circumstance, proposed comment
20(e)–2 under Alternative B clarified
that § 205.20(e) does not require
disclosure of the precise date the funds

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will expire. Under the proposed
comment, it would be sufficient to
disclose, for example, ‘‘Funds expire 5
years from the date funds last loaded to
the card.’’; ‘‘Funds can be used 5 years
from the date money was last added to
the card.’’; or ‘‘Funds do not expire.’’
The Board continues to believe that a
consumer should be informed when the
funds on a certificate or card expire.
Therefore, § 205.20(e)(3)(i) is adopted as
proposed, and proposed comment
20(e)–2 under Alternative B is adopted
as comment 20(e)–3 in the final rule.
Proposed comment 20(e)–3 under
Alternative B clarified that if the
certificate or card and the underlying
funds do not expire, that fact need not
be disclosed. The Board explained in
the proposal that disclosing the fact that
the underlying funds do not expire was
not necessary in these situations
because there is no risk of consumers
confusing the expiration date of the
certificate or card with that of the
underlying funds.
The Board did not receive comments
on the proposed comment. However,
upon further analysis, the Board has
added one further clarification to the
comment to provide that if the
certificate or card and the underlying
funds expire at the same time, only one
expiration date must be disclosed on the
certificate or card. Because there is no
risk that consumers would confuse the
expiration date of the certificate or card
with the expiration date of the
underlying funds when those two dates
are the same, distinguishing between
the funds expiration date and the
expiration date of the certificate or card
is not necessary. Therefore, proposed
comment 20(e)–3 under Alternative B is
adopted as comment 20(e)–4, with the
additional clarification.
Second, proposed § 205.20(e)(3)(ii)
provided that the disclosures must
include a toll-free telephone number
and, if one is maintained, a Web site
that a consumer may use to obtain a
replacement certificate or card after the
certificate or card expires, if the
underlying funds may still be available.
The Board believed that requiring
maintenance of a toll-free telephone
number for purposes of obtaining a
replacement card would be appropriate
because, as discussed above, a
certificate or card expiration date may
be earlier than the funds expiration
date.31 Although the proposed rule did
not similarly require maintenance of a
Web site for such purposes, if one is
31 As discussed below under § 205.20(f), the
requirement that the telephone number be toll-free
recognizes that the end user of a certificate or card
may not reside in the area where the certificate or
card was initially purchased.

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maintained, that Web site would also
have to be disclosed under
§ 205.20(e)(3)(ii). By requiring contact
information to be on the certificate or
card itself, the Board believed that
consumers would be able to obtain a
replacement certificate or card more
easily if the certificate or card expires
before the underlying funds.
Commenters did not object to the
proposed paragraph. Thus,
§ 205.20(e)(3)(ii) is adopted as proposed,
pursuant to the Board’s authority under
EFTA Section 904.
Proposed comment 20(e)–4 under
Alternative B clarified that if a
certificate or card does not expire, or if
the underlying funds are not available
after the certificate or card expires, a
toll-free telephone number and, if
maintained, a Web site address would
not need to be stated on the certificate
or card. However, a toll-free telephone
number and a Web site would still be
required to be disclosed if the certificate
or card has fees. See proposed
§ 205.20(f)(2). Proposed comment 20(e)–
5 under Alternative B clarified that the
same toll-free telephone number and
Web site could be used to comply with
the requirements of proposed
§§ 205.20(e)(3)(ii) and (f)(2).32 In
addition, proposed comment 20(e)–5
provided that neither a toll-free number
nor a Web site must be maintained or
disclosed on a certificate or card if no
fees are imposed in connection with the
certificate or card, and the certificate or
card and underlying funds do not
expire. The Board received no
comments on the proposed comments
20(e)–4 and 20(e)–5 under Alternative
B, which are adopted as comments
20(e)–5 and 20(e)–6, respectively, in the
final rule.
Finally, proposed § 205.20(e)(3)(iii)
would have required, if applicable, a
statement that the certificate or card
expires, but the underlying funds either
do not expire or expire later than the
certificate or card, and that the
consumer may contact the issuer for a
replacement card. This requirement was
designed to alert consumers to any
difference between the certificate or
card expiration date and the funds
expiration date so that they would not
mistakenly believe the funds were no
longer available if the certificate or card
expired during the minimum five-year
period set forth in the statute.
Proposed § 205.20(e)(3)(iii) also
provided that the statement must be
disclosed with equal prominence and in
32 The toll-free telephone number and Web site
may also be the same toll-free telephone number
and Web site provided for customer service issues
or questions relating to the certificate or card.

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close proximity to the certificate or card
expiration date. Typically, the
expiration date for a certificate or card
is printed on the certificate or card in a
prominent location and type size. Thus,
the Board was concerned that the
prominence of the expiration date on
the certificate or card, without any
additional disclosures, could lead
consumers to assume that once the
certificate or card itself expires, the
underlying funds would be unavailable.
Proposed comment 20(e)–6 under
Alternative B clarified the meaning of
close proximity in this context. Under
the proposed rule, close proximity
meant that the disclosure must appear
on the same side as the certificate or
card expiration date so that consumers
would not automatically assume funds
are not available after the certificate or
card expiration date. The proposed
comment also clarified in an example
that if the disclosure is the same type
size and is located immediately next to
or directly above or below the certificate
or card expiration date, without any
intervening text or graphical displays,
the disclosures would be deemed to be
equally prominent and in close
proximity. Under the proposal, the
disclosure did not need to be embossed
on the certificate or card to be deemed
equally prominent, even if the
expiration date was embossed on the
certificate or card. The Board believed
these format standards would
sufficiently ensure that most consumers
could determine whether an expiration
date for a certificate or card is different
from the funds expiration date.
One consumer group commenter
agreed that consumers should be made
aware of the distinction between the
funds expiration date and the certificate
or card expiration date, even if the
Board adopted Alternative A and
required that a certificate or card must
not expire prior to five years from the
date it was sold or issued to a consumer.
This commenter noted that consumers
still needed to be made aware of the
discrepancy in instances, for example,
where the funds expiration date changes
when a consumer reloads a card. The
city government entity commenter
believed that the Board should prohibit
certificates or cards from expiring before
the funds, so that only one expiration
date would be provided.
Many industry commenters believed
that requiring the disclosures under
proposed § 205.20(e)(3)(iii) would be
burdensome. These commenters
asserted that even the Board’s proposed
short disclosures would take up too
much space on the front of the card,
where expiration dates are typically
printed. They believed that the

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disclosures would have to be in a small
font size to fit with equal prominence
and in close proximity to the expiration
date. Industry commenters thus urged
the Board to eliminate the prominence
and proximity requirement and to
permit the disclosures to be made on the
back of the card or with materials that
accompany the card. Some industry
commenters stated that changing the
‘‘Valid thru’’ verbiage on the front of the
card to read ‘‘Expiration date’’ would
sufficiently alert consumers the
distinction between the funds
expiration date and the date that the
certificate or card expires. Other
industry commenters stated that the
requirement was unnecessary for most
consumers of certificates or cards
because most consumers use the entire
balance of a gift card long before the
funds expire.
The Board continues to believe that
the prominence and proximity
requirements are appropriate and
necessary for the disclosures required
under proposed § 205.20(e)(3)(iii). The
disclosures are intended not only to
inform consumers of their rights, but
also to reduce potential consumer
confusion that may occur if an
expiration date for a certificate or card
differs from the funds expiration date.
The Board believes disclosures
regarding the expiration of the funds
require more specific format
requirements than other disclosures that
are required to be on the certificate or
card, because they must counteract the
disclosure of the certificate or card
expiration date that a consumer may
mistake for a funds expiration date. If
the disclosure is in close proximity to
the card expiration date, the consumer
may be more likely to notice it and seek
additional information regarding how
the consumer could continue to use the
card after the card expiration date.
Moreover, the Board does not believe
that the subtle changes to verbiage
suggested by some commenters is
sufficient for consumers to distinguish
between the funds expiration date and
the expiration date of the certificate or
card.
For the foregoing reasons, the general
format requirements are retained in the
final rule, pursuant to the Board’s
authority under EFTA Section 904.
Proposed comment 20(e)–6 is adopted
substantially as proposed in comment
20(e)–7. Comment 20(e)–7 in the final
rule clarifies, however, that the close
proximity requirement does not apply to
oral disclosures. See § 205.20(c)(3).
Proposed comment 20(e)–6 under
Alternative B provided examples
regarding how a disclosure may inform
a consumer of the distinction between

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the certificate or card expiration and the
funds expiration under proposed
§ 205.20(e)(3)(iii). Under the proposed
comment, the disclosure could state on
the front of the card, for example, ‘‘Valid
thru 09/2016. Call for new card.’’;
‘‘Active thru 09/2016. Call for
replacement card.’’; or ‘‘Call for new
card after 09/2016.’’ The Board believed
these disclosures, in conjunction with
other disclosures required to be on the
card, such as a toll-free number that a
consumer could call for a replacement
card, would provide sufficient
information to inform consumers that
they may be able to continue using their
funds after the certificate or card itself
has expired.
The Board received no comments
regarding the proposed sample
disclosures, other than general concerns
regarding how the disclosures would fit
on the card if required to be made with
equal prominence and in close
proximity to the certificate or card
expiration date. Upon further analysis,
the Board has determined that some of
the proposed sample disclosures may
not sufficiently alert consumers to the
distinction between the funds
expiration date and the certificate or
card expiration date. Therefore, in the
final rule, comment 20(e)–7 has been
revised to provide different sample
disclosure language that more explicitly
alerts consumers to the reason that they
should contact the issuer for a new card.
The disclosure may state, for example,
‘‘Funds expire after card. Call for
replacement card.’’ or ‘‘Funds do not
expire. Call for new card after 09/2016.’’
Comment 20(e)–7 also clarifies that
disclosures made pursuant to
§ 205.20(e)(3)(iii)(A) may also fulfill the
requirements of § 205.20(e)(3)(i). For
example, making a disclosure that
‘‘Funds do not expire.’’ to comply with
§ 205.20(e)(3)(iii) would also fulfill the
requirements of § 205.20(e)(3)(i).
The Board recognizes that the amount
of space available for disclosures near
the certificate or card expiration date is
limited. The Board also understands
that some disclosures could be difficult
to provide clearly and conspicuously, if
the disclosures are required to be in
close proximity to the certificate or card
expiration date. To address this
concern, § 205.20(e)(3)(iii) has been
revised to provide relief from these
disclosures for a non-reloadable
certificate or card that bears an
expiration date that is at least seven
years from the date of manufacture. The
Board believes that the seven-year safe
harbor for the disclosures under
§ 205.20(e)(3)(iii) for non-reloadable
certificates and cards will provide the
vast majority of consumers ample time

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to use the funds available on the
certificate or card, thus making the
disclosures under § 205.20(e)(3)(iii)
unnecessary. For purposes of this safe
harbor, new comment 20(e)–8 states that
the date of manufacture is the date on
which the certificate or card expiration
date is printed on the certificate or card.
Notwithstanding this safe harbor
provision with respect to the disclosures
in § 205.20(e)(3)(iii), § 205.20(e)(1)
would still prohibit the sale or issuance
of such certificate or card unless there
are policies and procedures in place to
provide consumers with a reasonable
opportunity to purchase the certificate
or card with at least five years
remaining until the certificate or card
expiration date. In addition, under
§ 205.20(e)(2), the funds may not expire
before the certificate or card expiration
date, even if the expiration date of the
certificate or card bears an expiration
date that is more than five years at the
date of purchase. See comment 20(e)–8.
In the event that a certificate or card
bearing an expiration date of seven
years or more at the time the certificate
or card was manufactured is purchased
with a certificate or card expiration date
with less than five years remaining, the
consumer would still have access to the
funds for at least five years from the
date of purchase, and the certificate or
card would state the disclosures
required under § 205.20(e)(3)(i) and (ii)
alerting the consumer to the funds
expiration date and contact information
for obtaining a replacement card.
Nonetheless, the Board expects that,
based on its understanding of current
industry practice, most consumers will
purchase certificates or cards with more
than five years remaining before the
certificate or card expires.
Finally, the Board noted in proposed
comment 20(e)–7 under Alternative B
that proposed §§ 205.20(d)(2), (e)(3), and
(f)(2) (as discussed below) would
require certain disclosures to be made
on the certificate or card itself, as
applicable. The proposed comment thus
clarified that in addition to any
disclosures required under
§ 205.20(e)(3), any applicable
disclosures under §§ 205.20(d)(2) and
(f)(2) of this section must also be
provided on the certificate or card. The
Board received no comments on the
proposed comment, which is adopted as
comment 20(e)–9 in the final rule.
Other Protections and Clarifications
In the November 2009 Proposed Rule,
the Board proposed § 205.20(e)(4) to
prohibit the imposition of fees to
replace an expired certificate or card if
the funds loaded on the certificate or
card have not expired. Proposed

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§ 205.20(e)(4), however, contained an
exception for certificates or cards that
have been lost or stolen. Proposed
comment 20(e)–8 under Alternative B
clarified that although a fee would be
permitted to be charged to replace a lost
or stolen certificate or card under
proposed § 205.20(e)(4), the rule did not
create a substantive requirement that
issuers replace a lost or stolen certificate
or card.
Several commenters supported the
Board’s proposal to prohibit fees to
replace an expired certificate or card if
the underlying funds have not expired.
Some industry commenters, however,
opposed the Board’s proposal, noting
that the Credit Card Act did not
specifically provide for this right. The
Board believes that EFTA Section 904(c)
provides the Board with the authority to
enact regulations to carry out the
purposes of the statutory protections.
See 15 U.S.C. 1693b(c). Proposed
§ 205.20(e)(4) was meant to ensure that
consumers would have full use of the
funds loaded on a certificate or card for
the minimum five-year period set forth
in the statute by providing consumers
with a cost-free means to access funds
if a certificate or card expired before the
underlying funds. The Board continues
to believe this provision is integral to
effectuating the protections afforded by
the statute.
Consumer group commenters also
suggested that the Board provide
consumers with the right to one costfree replacement for a lost or stolen
certificate or card. Imposing a fee
restriction for the replacement of a lost
or stolen certificate or card goes beyond
the protections afforded by the statute,
and is not related to the expiration date
of the card or certificate. Furthermore,
the Board recognizes that there are costs
to issuing a replacement certificate or
card. Therefore, the final rule does not
prohibit issuers from charging fees to
replace a lost or stolen certificate or
card.
Other industry commenters suggested
that if a certificate or card expires but
the underlying funds have not yet
expired, an issuer should be permitted
to return the balance of funds to the
consumer instead of providing a
replacement certificate or card. If the
remaining amount on a certificate or
card is small or if there is little time
remaining before the expiration of the
funds, an issuer may find it more costeffective to return the balance of funds
to the consumer, for example, by check,
rather than issuing another certificate or
card. Furthermore, certain state laws
require an issuer to return the balance
of funds to a consumer upon the

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occurrence of a triggering event with a
certain remaining amount.
The Board notes that neither the
statute nor the regulation specifically
requires that a replacement certificate or
card be issued. Therefore, issuers may,
at their option in accordance with
applicable state law, return the balance
of funds to a consumer instead of
issuing a replacement for an expired
certificate or card. However, the Board
believes that just as a fee may not be
charged for replacing the certificate or
card, similarly, no fee may be charged
for refunding the balance of the funds.
Consequently, the Board is amending
§ 205.20(e)(4) to provide that no fee may
be charged for providing a certificate or
card holder with the remaining balance
prior to the funds expiration date,
unless such certificate or card has been
lost or stolen. A new comment 20(e)–10
is adopted to clarify this point. In
addition, proposed comment 20(e)–8
under Alternative B is adopted in final
as comment 20(e)–11.
Proposed comment 20(e)–9 under
Alternative B clarified that a certificate
or card is not considered to be issued or
loaded with funds until it has been
activated for use. As explained in the
November 2009 Proposed Rule, issuers
often produce gift cards for display on
retail shelves and racks or for mailing to
consumers, but, for security reasons,
these cards cannot be used until the
card has been activated by a retail
employee or by telephone. The
proposed comment was meant to clarify
that although a certificate or card may
have been produced, it is not considered
to have been ‘‘issued’’ or to have had
funds ‘‘loaded’’ for purposes of
§ 205.20(e) until that card has been
activated for use. The Board did not
receive comment on this issue.
Therefore, proposed comment 20(e)–9
under Alternative B has been adopted in
final, with one minor clarifying
amendment, as comment 20(e)–12.
Finally, some industry commenters
asked the Board to clarify how the
expiration date restrictions may apply to
certain gift cards that are redeemable for
songs, media, or virtual goods.33 The
Board understands that for these types
of cards, it is a common practice that
once a consumer redeems the card, the
full value is debited from the card and
credited to another ‘‘account’’ 34 that is
used specifically to buy such goods or
33 Virtual goods are intangible digital items that
can be purchased for use in on-line communities or
on-line games. See Claire Cain Miller & Brad Stone,
‘‘Virtual Goods Start Bringing Real Paydays,’’ New
York Times, November 7, 2009, at A1.
34 An ‘‘account’’ established by a merchant to
purchase virtual goods would not be an account for
purposes of Regulation E.

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services, even if the consumer does not
purchase the goods or services at that
time. The Board concludes that once a
certificate or card has been fully
redeemed, the five-year minimum
expiration term no longer applies to the
underlying funds. New comment 20(e)–
13 sets forth this clarification. In
addition, the comment provides that if
the consumer only partially redeems the
value of a certificate or card, the fiveyear minimum expiration term
requirement continues to apply to the
funds remaining on the certificate or
card.
20(f) Additional Disclosure
Requirements for Gift Certificates or
Cards
EFTA Section 905(a)(4) and
§ 205.7(b)(5) of Regulation E require the
disclosure of any fees imposed by a
financial institution for electronic fund
transfers or for the right to make such
transfers. See 15 U.S.C. 1693c(a)(4). The
Board has the authority under EFTA
Section 915(d)(2) to apply the
requirements of Regulation E to gift
cards, store gift cards, and general-use
prepaid cards. See 15 U.S.C.
1693m(d)(2). Using this authority, the
Board proposed § 205.20(f) to require
additional fee-related disclosures for gift
certificates, store gift cards, and generaluse prepaid cards.
20(f)(1) Fee Disclosures
Proposed § 205.20(f)(1) would have
required certain disclosures to be
provided on or with the certificate or
card for each type of fee (other than
dormancy, inactivity, or service fees)
that may be imposed in connection with
a gift certificate, store gift card, or
general-use prepaid card. Specifically,
the type of fee, the amount of the fee (or
an explanation of how the fee will be
determined), and the conditions under
which the fee may be imposed would be
required to be disclosed under the
proposal. The proposed provision did
not apply to dormancy, inactivity, and
service fees because those fees were
required to be disclosed under proposed
§ 205.20(d)(2). Therefore, proposed
§ 205.20(f)(1) would have required the
disclosure of fees such as a one-time
initial issuance fee and cash-out fee.
The proposal permitted these fee
disclosures to be provided either on or
with the certificate or card in light of the
limited space availability on a certificate
or card and other disclosure
requirements. In addition, the Board
proposed to require the disclosure of
these fees prior to purchase, as
discussed above in the supplementary
information to § 205.20(c)(3).

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Commenters generally agreed that any
fees that may be imposed should be
disclosed to consumers. Industry
commenters agreed that the fee
disclosures under § 205.20(f)(1) should
be permitted to be provided along with,
rather than on, a certificate or card due
to the limited amount of space on
certificates and cards. Accordingly,
§ 205.20(f)(1) is adopted as proposed.
20(f)(2) Telephone Number for Fee
Information
The Board also proposed
§ 205.20(f)(2) to require the clear and
conspicuous disclosure of a toll-free
telephone number and, if one is
maintained, a Web site, for consumers
to obtain information about fees. This
disclosure had to be provided on a gift
certificate, store gift card, or general-use
prepaid card. Proposed § 205.20(f)(2)
also required maintenance of a toll-free
telephone number to provide
information on the fees required to be
disclosed under proposed
§§ 205.20(d)(2) and (f)(1). The proposed
rule did not require that a Web site be
maintained for such purposes. However,
if a Web site that provides information
about fees is already maintained,
proposed § 205.20(f)(2) would have
required that the Web site must also be
disclosed.
Given the limited space on a
certificate or card, the Board anticipated
that issuers would opt to disclose some
fee information on materials
accompanying the certificate or card, as
opposed to on the certificate or card
itself. In such cases, the disclosures
accompanying the certificate or card
could become separated from the actual
certificate or card. By requiring the
reference to the toll-free telephone
number and, if one is maintained, the
Web site, on the certificate or card, the
Board sought to ensure that consumers
would have an easy and cost-free means
of obtaining fee information related to
the certificate or card, even if the
consumer no longer has the original
disclosure.
One consumer group commenter
agreed that a telephone number where
consumers could obtain fee and other
information should be available to
consumers. This commenter believed
that information should not be provided
solely through a Web site because some
consumers may not have access to the
Internet.
Pursuant to the Board’s authority
under EFTA Sections 915(c)(2) and
915(d)(1)(A) and EFTA Section 904,
§ 205.20(f)(2) is adopted substantially as
proposed. The Board believes it is
appropriate to require maintenance of a
toll-free telephone number, because it

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will provide consumers with a means to
access important information about the
certificate or card at no cost no matter
where in the United States the
consumer may use the certificate or
card. Moreover, the Board understands
that many issuers already maintain tollfree telephone numbers and Web sites
for consumers to contact for further
information and often provide this
information directly on the certificates
or cards they issue. As a result, the
requirement should not impose
additional burdens on many issuers.
The proposal contained several
comments to clarify proposed
§ 205.20(f). The Board received no
comments on the proposed comments to
§ 205.20(f), each of which is adopted
substantially as proposed.
Comment 20(f)–1 clarifies that if a
certificate or card does not have any
fees, the § 205.20(f)(2) disclosure is not
required on the certificate or card.
However, a telephone number and a
Web site may still have to be disclosed
pursuant to § 205.20(e)(3)(ii) if funds
underlying a certificate or card may be
available after the certificate or card
expires.
Comment 20(f)–2 clarifies that the
same toll-free number and Web site may
be used to fulfill the requirements of
§§ 205.20(e)(3)(ii) and (f)(2).35 The
comment also clarifies that neither a
toll-free number nor a Web site must be
maintained or disclosed if no fees are
imposed in connection with a certificate
or card, and the certificate or card and
underlying funds do not expire.
Sections 205.20(d)(2), (e)(3), and (f)(2)
require certain disclosures to be
provided on the certificate or card itself,
as applicable. Comment 20(f)–3 clarifies
that in addition to any disclosures
required pursuant to § 205.20(f)(2), any
applicable disclosures under
§§ 205.20(d)(2) and (e)(3) of this section
must be provided on the certificate or
card.
20(g) Compliance Dates
As discussed above, the Credit Card
Act provides that the final rules
implementing the statutory gift card
provisions must become effective
August 22, 2010. Section 205.20(g) has
been added to the final rule to address
transition issues associated with
implementing the rule by the August 22,
2010 effective date.
The Board solicited comment on the
potential costs that would be incurred if
issuers and other persons subject to the
35 The toll-free telephone number and Web site
may also be the same toll-free telephone number
and Web site provided for customer service issues
or questions relating to the certificate or card.

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rule were required to remove and
replace card stock, including cards that
have already been placed into store
inventory, to ensure that all products
sold on or after August 22, 2010 fully
comply with the new requirements. The
Board also solicited comment on
whether it should consider rules to
provide relief for gift certificates, store
gift cards, and general-use prepaid cards
in distribution as of August 22, 2010
from some or all of the new
requirements. For example, the final
rule could require all such certificates or
cards to comply with the substantive
restrictions on imposing dormancy,
inactivity, or service fees, and
expiration dates, but otherwise permit
such certificates or cards to be sold even
if they do not contain the required
disclosures. Finally, the Board solicited
comment on an appropriate transition
period after which all certificates or
cards must fully comply with the new
rules.
Industry commenters urged the Board
to grandfather all physical cards already
in the marketplace and in distribution,
including cards that are sold on-line or
via telephone, for a certain period of
time, ranging from 180 days to 24
months. In particular, industry
commenters noted that the short
implementation period between the
issuance of final rules and the statutory
compliance date of August 22, 2010
would leave insufficient time for the
industry to review the new rule
requirements; design, produce, and
merchandise new stock; and remove
and replace old stock. In addition,
industry commenters observed that the
final rule could require the possible
manufacture and installation of new
displays and signage, each of which
would require additional time.
Several industry commenters also
questioned whether there would be
adequate industry resources available
either to produce sufficient compliant
cards or to replace non-compliant cards
prior to the effective date. As a result,
some issuers and retailers may not have
their orders filled in an amount
sufficient to meet consumer demand,
which could significantly reduce sales,
especially if stock could not be replaced
by the holiday season when the bulk of
sales occur.
Some industry commenters estimated
that replacing all card stock in inventory
could cost an estimated $20 to $50
million per card issuer and/or
distributor, including the costs of
destroying existing card stock. One
issuer of promotional and reward cards
stated that it typically holds several
million customized cards in inventory
at any given point in time for

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promotional programs that may run a
year or longer, and thus estimated that
it would cost several hundred
thousands of dollars to destroy current
card inventory and order replacement
inventory. Industry commenters further
noted the adverse environmental impact
from destroying large quantities of
plastic card stock, which are only rarely
made from recyclable or biodegradable
materials.
In the interim, industry commenters
noted that consumers would remain
adequately protected if the Board
required card issuers to comply with the
substantive fee and expiration date
restrictions in the Credit Card Act, and
to provide adequate signage, displays,
and/or customer service messaging
apprising consumers of their new rights.
In contrast, one state attorney general
commenter urged the Board to prohibit
the sale of ‘‘grandfathered’’ gift
certificates and cards that do not
contain the prescribed disclosures after
the effective date of the Credit Card Act.
Industry commenters also urged the
Board to confirm that § 205.20 does not
apply to gift certificates and gift cards
purchased by consumers prior to August
22, 2010 to avoid retroactive application
of the rule. Industry commenters further
noted that card issuers were unlikely to
have contact information of consumers
who have either purchased or received
the cards, and therefore would be
unable to provide those consumers with
new disclosures.
Under Section 403 of the Credit Card
Act, the gift card provisions must
become effective 15 months after the
date of enactment, or by August 22,
2010. Accordingly, the Board believes
that the purpose and intent of these new
provisions would be most effectively
carried out by requiring full compliance
with the final rule, including each of the
substantive and disclosure
requirements, by August 22, 2010. In
this regard, the Board believes that there
could be significant consumer confusion
if gift cards sold after August 22, 2010
carried disclosures that were
inconsistent with the substantive
protections afforded by the Credit Card
Act. In particular, consumers relying on
a card expiration date that is shorter
than five years from the date of issuance
may elect to discard an expired gift card
notwithstanding the fact that the
underlying funds may remain valid after
card expiration, and thus be denied the
protections under the Credit Card Act.
Some industry commenters asserted
that consumers could be apprised of
their new rights through signage at the
point of sale, or through
communications via an issuer’s toll-free
telephone number or Web site, thereby

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mitigating any adverse effect from
inconsistent card disclosures. However,
the Board believes that such measures
would not by themselves provide
adequate protection. In the first
instance, signage at the point-of-sale
would be ineffective for the vast
majority of gift card recipients as they
would not be the consumers initially
purchasing the cards. With respect to
other proposed methods of
communication, a consumer that had no
reason to call the telephone number or
visit the Web site would not receive the
necessary disclosures. For example, a
recipient may receive a card with an
expiration date printed on it which may
no longer apply after the effective date
of the rule, and then dispose of the
expired card without first calling the
telephone number on the card.
Accordingly, new § 205.20(g)(1)
provides that § 205.20 applies to any gift
certificate, store gift card, or general-use
prepaid card sold to a consumer on or
after August 22, 2010, or provided to the
consumer as a replacement for such
certificate or card. However, the final
rule does not apply the new
requirements, including the restrictions
on imposing dormancy, inactivity, or
service fees and on expiration dates, or
the disclosure requirements set forth in
the Credit Card Act or the regulation, to
certificates or cards sold or provided to
a consumer prior to that date.
Section 205.20(g)(2) sets forth a
transition rule for loyalty, award, and
promotional gift cards, which are
otherwise only subject to the disclosure
requirements under § 205.20.
Specifically, the final rule does not
apply to any gift cards provided to a
consumer through a loyalty, award, or
promotional program where the period
of eligibility for the program began prior
to August 22, 2010. For these cards, the
same concerns regarding the
inconsistency of disclosures and
substantive practices do not apply. Gift
cards issued through a loyalty, award, or
promotional program that begins on or
after August 22, 2010 must comply with
the disclosure requirements in
§ 205.20(a)(4)(iii) in order to qualify for
the exclusion in § 205.20(b)(3). New
comment 20(g)–1 provides additional
guidance regarding the period of
eligibility for a loyalty, award, or
promotional program.
Additional Issues
Authority To Adopt Additional EFTA
Protections
EFTA Section 915(d)(2) gives the
Board the authority to determine the
extent to which the individual
definitions and provisions of the EFTA

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or Regulation E should apply to generaluse prepaid cards, gift certificates, and
store gift cards. See 15 U.S.C.
1693m(d)(2). In the November 2009
Proposed Rule, the Board proposed to
exercise this authority to require the
disclosure of any fees that may apply,
and the conditions under which such
fee may be imposed. See, e.g., proposed
§ 205.20(f). However, the Board did not
otherwise seek to apply any other
provisions in the EFTA or Regulation E
to gift certificates, store gift cards, or
general-use prepaid cards. For example,
the Board did not propose to apply the
periodic statement disclosures or error
resolution obligations under the EFTA
or Regulation E to gift certificates, store
gift cards, or general-use prepaid cards.
Industry commenters agreed that
broader application of Regulation E
requirements to gift certificates, store
gift cards, and general-use prepaid cards
was not appropriate, because it would
lead to inconsistent treatment of the gift
certificates or cards addressed by this
rule and other prepaid card products,
such as general-purpose reloadable
cards that are used as account
substitutes. One industry commenter
observed that applying periodic
statement requirements to nonreloadable gift cards, for example,
would be problematic because such
cards are typically issued anonymously
and therefore customer information
would generally not be available for
providing statements.
Consumer groups, however, urged the
Board to exercise the authority provided
by EFTA Section 915(d)(1) to clarify that
Regulation E covers general-use prepaid
cards that consumers may use as a
substitute for traditional bank accounts.
See 15 U.S.C. 1693m(d)(1). While many
of these cards currently carry voluntary
protections that resemble Regulation E
protections, consumer groups observed
that such voluntary provisions could be
rescinded at any time, unlike regulatory
and statutory requirements such as
those provided for debit cards under the
EFTA and Regulation E. In particular,
consumer groups believed that generaluse prepaid cardholders should have
the same protections against
unauthorized transactions and be able to
recover missing funds due to lost or
stolen cards.
As stated in the proposal, the Board
believes that it is more appropriate to
make any determination whether to
impose periodic statement
requirements, error resolution
obligations, and other protections set
forth in the EFTA and Regulation E with
respect to prepaid cards in the context
of a separate rulemaking to avoid any
regulatory gaps or inconsistencies. For

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example, a requirement to impose some
form of periodic statement or error
resolution obligations for reloadable gift
cards could lead to inconsistent
treatment if similar requirements were
not simultaneously adopted for generalpurpose reloadable cards, which may
serve as substitutes for accounts subject
to the EFTA and Regulation E.
The Credit Card Act also granted the
Board authority to limit the amount of
dormancy, inactivity, or service fees, or
the balance below which such fees or
charges may be assessed. See EFTA
Section 915(d)(1); 15 U.S.C.
1693m(d)(1). The Board did not propose
to exercise this authority in light of
downward trends in the amount of
dormancy and inactivity fees in
connection with retail gift cards over
time.36
Consumer groups urged the Board to
use its authority in order to restrict the
size of dormancy, inactivity, and service
fees to only cover the costs to maintain
a gift card or gift certificate so as to
ensure cards do not lose their entire
value within a short period of time once
the one-year inactivity period has run.
Consumer groups also stated that the
Board should limit the size and amount
of other one-time fees, such as issuance
and cash-out fees, to ensure that such
fees are reasonable and proportional to
a gift card’s value. Finally, consumer
groups believed the Board should
establish a balance above which fees
could not be assessed on gift cards and
gift certificates so that consumers would
not be penalized and lose most of their
gift card’s remaining value. Industry
commenters supported the Board’s
decision not to impose any dollar caps
on fees, or to establish a balance above
which fees could not be assessed, in
connection with gift certificates, store
gift cards, and general-use prepaid
cards.
The Board continues to believe that
the need for additional restrictions on
fees is not clear in light of the general
downward trend in dormancy and
inactivity fees for gift cards and gift
certificates.37 In addition, the statute
only permits one such fee per month if
there has been no activity over the
preceding 12-month period, which may
36 For example, the most recent survey by one
government agency indicates the median inactivity
fee has decreased from $1.73 per month in 2003 to
$1.38 per month in 2007. See Montgomery County
Office of Consumer Protection, Gift Card Reports,
2003–2007 (available at: http://
www.montgomerycountymd.gov/ocptmpl.asp?url=/
content/ocp/consumer/a-zgiftcardreports.asp).
37 One major issuer of network-branded gift cards
recently announced plans to eliminate monthly fees
altogether. See Andrew Martin, ‘‘American Express
to End Monthly Fees on Gift Cards,’’ New York
Times, Oct. 1, 2009, at B2.

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put downward pressure on the amount
of fees assessed in connection with gift
cards. The Board will continue to
monitor the development of the gift card
market as it adjusts to the new rules and
could take action to impose other
restrictions on dormancy, inactivity, or
service fees at a later time, if
appropriate.
Preemption
Several industry commenters urged
the Board to clarify whether the new
protections regarding funds expiration
dates supersede state laws requiring the
escheat of funds underlying gift cards
and gift certificates. For example,
certain state laws require issuers of
unused gift cards to remit the remaining
funds to the state where the cardholder
resides or where the issuer is
incorporated after a certain period of
time—typically three to five years after
the card is sold or last used. Industry
commenters expressed concern that
state escheat requirements could mean
that in some states, issuers would be
required to remit funds to the state after
three years, while still remaining
obligated to honor the funds under the
gift card rules for up to two additional
years, consistent with the requirement
that funds remain valid for five years
from the date of issuance or last load.
Some commenters acknowledged that if
a consumer used a certificate or card
after the issuer had remitted funds to
the state, but prior to the funds’
expiration date, issuers could recover
from the state the funds that already had
been remitted. However, the
commenters argued that this process
was administratively burdensome and
costly for the issuer. Thus, industry
commenters asserted that the Board
should preempt such state escheat laws
for inconsistency with the final rule
requirements to avoid putting card
providers in a position where they
would be unable to comply with both
the final rule and state escheat laws.
Under the revised preemption
provisions in § 205.12, discussed above,
the Board may determine whether a
state law relating to, among other things,
expiration dates of gift certificates, store
gift cards, or general-use prepaid cards
is preempted by a provision of the
regulation. However, a provision can
only preempt a state law that is
inconsistent with the provision and
only to the extent of its inconsistency.
Moreover, the regulation provides that a
state law is not inconsistent with any
provision if it is more protective of
consumers.
State escheat laws vary significantly.
For example, the number of years that
may elapse before an issuer must remit

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funds to the state differs among the
states. Moreover, some state laws do not
require an issuer of gift certificates or
gift cards to remit remaining funds to
the state in certain circumstances. Some
states may also provide a process
through which an issuer may recover
funds previously escheated to the state
in the event the issuer subsequently
honors a consumer’s claim to funds. As
such, the Board believes it is not
feasible or prudent to make a
preemption determination that applies
generally to all states.
Upon request for a preemption
determination with respect to a
particular state’s escheat law, the Board
would apply the standards set forth in
§ 205.12(b)(2) to determine whether
such a law is inconsistent with § 205.20.
The Board’s analysis would be
published for notice and comment, and,
if the Board determines the state law is
preempted, the final determination
would be published in the commentary
to § 205.12.
VII. Final Regulatory Flexibility
Analysis
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) generally
requires an agency to perform an
assessment of the impact a rule is
expected to have on small entities.
However, under section 605(b) of the
RFA, the regulatory flexibility analysis
otherwise required under section 604 of
the RFA is not required if an agency
certifies, along with a statement
providing the factual basis for such
certification, that the rule will not have
a significant economic impact on a
substantial number of small entities.
Based on its analysis and for the reasons
stated below, the Board believes that
this final rule is not likely to have a
significant economic impact on a
substantial number of small entities.
1. Statement of the need for, and
objectives of, the rule. The EFTA was
enacted to provide a basic framework
establishing the rights, liabilities, and
responsibilities of participants in
electronic fund transfer systems. The
primary objective of the EFTA is the
provision of individual consumer rights.
15 U.S.C. 1693. The EFTA authorizes
the Board to prescribe regulations to
carry out the purpose and provisions of
the statute. 15 U.S.C. 1693b(a). The Act
expressly states that the Board’s
regulations may contain ‘‘such
classifications, differentiations, or other
provisions, * * * as, in the judgment of
the Board, are necessary or proper to
effectuate the purposes of [the Act], to
prevent circumvention or evasion [of
the Act], or to facilitate compliance
[with the Act].’’ 15 U.S.C. 1693b(c).

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The Board is adopting revisions to
Regulation E to implement Title IV of
the Credit Card Act, which generally
restricts a person’s ability to impose a
dormancy, inactivity, or service fee with
respect to a gift certificate, store gift
card, or general-use prepaid card. Title
IV also generally provides that a gift
certificate, store gift card, or general-use
prepaid card may not be sold or issued
unless the expiration date is no less
than five years from the date a gift
certificate is issued or five years from
the date funds were last loaded to a
store gift card or general-use prepaid
card.
In addition, the final rule requires the
disclosure of all other fees imposed in
connection with a gift certificate, store
gift card, or general-use prepaid card.
The certificate or card must also
disclose a toll-free telephone number
and, if one is maintained, a Web site
that a consumer may access to obtain fee
information or replacement certificates
or cards.
The Board believes that the revisions
to Regulation E discussed above are
consistent with the Act, as amended by
Title IV of the Credit Card Act, and
within Congress’s broad grant of
authority to the Board to adopt
provisions that carry out the purposes of
the statute.
2. Small entities affected by the final
rule. The number of small entities
affected by this proposal is unknown.
Under the final rule, a person is
prohibited from imposing a dormancy,
inactivity, or service fee with respect to
a gift certificate, store gift card, or
general-use prepaid card, unless three
conditions are satisfied. First, a
dormancy, inactivity, or service fee may
be imposed only if there has been no
activity with respect to the certificate or
card within the one-year period prior to
the imposition of the fee. Second, only
one such fee may be assessed in a given
calendar month. Third, disclosures
regarding dormancy, inactivity, or
service fees must be clearly and
conspicuously stated on the certificate
or card, and the issuer or seller must
provide these disclosures to the
purchaser before the certificate or card
is purchased. The final rule is limited in
scope to certificates or cards sold or
issued to consumers primarily for
personal, family, or household
purposes.
The final rule also provides that a gift
certificate, store gift card, or general-use
prepaid card may not be sold or issued,
unless the expiration date of the funds
underlying the certificate or card is no
less than five years after the date of
issuance (in the case of a gift certificate)
or five years after the date of last load

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of funds (in the case of a store gift card
or general-use prepaid card). In
addition, information about whether
funds underlying a certificate or card
may expire must be clearly and
conspicuously disclosed both on the
certificate or card and prior to purchase.
Under the final rule, persons subject
to the rule are required to maintain
policies or procedures to provide
consumers with a reasonable
opportunity to purchase a certificate or
card with an expiration date that is at
least five years from the date of
purchase. The final rule also prohibits
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.
In addition to the statutory fee
restrictions described above, the final
rule requires the disclosure of all other
fees imposed in connection with a gift
certificate, store gift card, or general-use
prepaid card. These disclosures must be
provided prior to purchase and on or
with the certificate or card. The final
rule also requires the disclosure on the
certificate or card of a toll-free
telephone number and, if one is
maintained, a Web site that a consumer
may access to obtain fee information or
replacement certificates or cards.
For loyalty, award, or promotional gift
cards, the final rule requires three
disclosures on the card, as applicable:
(1) A statement indicating that the
certificate or card is issued for loyalty,
award, or promotional purposes; (2) the
expiration date of the underlying funds;
and (3) a toll-free telephone number
and, if one is maintained, a Web site
that a consumer may access to obtain fee
information. Fees imposed in
connection with a loyalty, award, or
promotional card must be disclosed on
or with the card. A loyalty, award, or
promotional gift card is not, however,
subject to the substantive restrictions on
imposing dormancy, inactivity, or
service fees, or on expiration dates.
Overall, to comply with the final rule,
all persons involved in issuing,
distributing or selling gift cards and
certificates (or loyalty, award, or
promotional gift cards) may need to
review and potentially revise
disclosures that appear on or with the
certificates or cards. In addition, issuers,
sellers, and distributors of gift
certificates, store gift cards, and generaluse prepaid cards may have to review
and potentially revise their inventory
distribution and management policies
and controls in order to provide
consumers with a reasonable
opportunity to purchase certificates or
cards with an expiration date with at

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16611

least than five years from the date of
purchase.
The Small Business Administration
(SBA) has defined a small business as
one whose average annual receipts do
not exceed $7 million or who have
fewer than 500 employees.38 The Board
expects that well over 90% of all
businesses qualify as small businesses
under the SBA’s standards.39
Consequently, a very large number of
small entities could be subject to the
final rules to the extent that they issue
or sell gift certificates, store gift cards,
or general-use prepaid cards. The Board
is unaware, however, of any industry
data regarding the number of merchants
that issue gift certificates or gift cards.
Nonetheless, the final requirements
apply only to the extent that a certificate
or card program imposes dormancy,
inactivity, or service fees or establishes
an expiration date with respect to the
underlying funds. In this regard, the
Board understands that the vast majority
of gift certificates and store gift cards
issued by merchants or retailers today
do not carry such fees or expiration
dates.40 Moreover, smaller merchants
are more likely to issue gift certificates
in paper form only, and such certificates
are not covered by the final rule. See
§ 205.20(b)(5). Thus, the Board believes
the final rule would not impact a
significant number of merchants that
issue store gift cards or gift certificates.
Similarly, the Board believes the final
rule also would not significantly impact
the entities that distribute or sell such
cards or certificates on behalf of
merchants. Moreover, the Board
understands that given their size, such
entities are unlikely to be ‘‘small
businesses’’ as defined by the SBA.
In addition, the final rule potentially
covers issuers of general-use prepaid
cards, primarily financial institutions,
card program managers that issue or
distribute general-use prepaid cards,
and distributors or retailers of such
38 See SBA, Summary of Size Standards by
Industry (available at: http://www.sba.gov/
contractingopportunities/officials/size/
summaryofssi/index.html).
39 See Small Business Administration, Office of
the Advocacy, Frequently Asked Questions
(available at: http://web.sba.gov/faqs/
faqindex.cfm?areaID=24); Employer Firms, &
Employment by Employment Size of Firm by
NAICS Codes, 2006 (available at: http://
www.sba.gov/advo/research/us06_n6.pdf).
40 See Montgomery County Office of Consumer
Protection, Gift Cards 2007 (available at: http://
www.montgomerycountymd.gov/ocptmpl.asp?url=/
content/ocp/consumer/a-zgiftcardreports.asp)
(reporting that 18 of 22 retail gift cards surveyed do
not carry any fees or expiration dates). See also
Retail Gift Card Association, Code of Principles
(available at: http://www.thergca.org/uploads/
Code_of_Principles_PDF.pdf) (recommending as a
best practice for retail gift card programs that no
fees or expiration dates should apply).

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cards. General-use prepaid cards may be
more likely to carry dormancy,
inactivity, or service fees and expiration
dates compared to gift certificates and
store gift cards. Consequently, entities
that issue, distribute or sell general-use
prepaid cards will be more likely to be
impacted by the final rule.
In the proposed regulatory flexibility
analysis, the Board stated that the
proposal would be unlikely to impact a
substantial number of small entities
with respect to the issuance or sale of
general-use prepaid cards. In response,
one industry trade association
commenter representing convenience
stores observed that many of its
constituents, comprised of small,
independent convenience stores, sold a
variety of prepaid products, including
store gift cards and general-purpose
reloadable cards. Thus, because such
retailers would have to adopt new
controls to ensure that general-purpose
reloadable cards are not marketed as a
gift card or gift certificate, this
commenter asserted the rule could have
a significant impact on small businesses
overall.
As an initial matter, the Board notes
that cards that would otherwise be
considered general-use prepaid cards
may in many cases be exempt from the
statute and proposed rule if they are
reloadable and not marketed or labeled
as a gift card or gift certificate. In
addition, as discussed above, open-loop
cards, which include general-use
prepaid cards, make up a relatively
small portion of the total prepaid card
market in terms of the number of cards
issued and the dollar value of the
amounts loaded.
To the extent that a retailer may sell
covered gift cards alongside generalpurpose reloadable cards, the rule may
require new signage or reorganization of
product displays to avoid the marketing
of the general-purpose reloadable cards
as a gift card. Nonetheless, the Board
understands that in many cases, a
merchandiser working on behalf of a
distributor of prepaid cards, rather than
the retailer itself, may set up the prepaid
card display, thereby mitigating the
retailer’s compliance burden. The Board
has also provided additional examples
in the final rule to illustrate how
excluded cards, including generalpurpose reloadable cards, may be sold
alongside gift certificates or cards
covered by the rule to further facilitate
compliance.
For these reasons, although the Board
is not aware of any data regarding
entities that issue or otherwise sell
general-use prepaid cards, the Board
believes that, overall, the rule is not
likely to have a significant impact on a

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substantial number of small entities
with respect to the issuance or sale of
general-use prepaid cards.
3. Other federal rules. The Board has
not identified any federal rules that
duplicate, overlap, or conflict with the
revisions to Regulation E.
VIII. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C.
3506; 5 CFR part 1320 Appendix A.1),
the Board reviewed the final rule under
the authority delegated to the Board by
the Office of Management and Budget
(OMB). The collection of information
that is subject to the PRA by this final
rule is found in 12 CFR part 205. The
Federal Reserve may not conduct or
sponsor, and an organization is not
required to respond to, this information
collection unless the information
collection displays a currently valid
OMB control number. The OMB control
number is 7100–0200.
This information collection is
required to provide benefits for
consumers and is mandatory. See 15
U.S.C. 1693 et seq. Since the Board does
not collect any information, no issue of
confidentiality arises. The respondents/
recordkeepers are for-profit financial
institutions, including small businesses.
Institutions are required to retain
records for 24 months, but this
regulation does not specify types of
records that must be retained.
Title IV of the Credit Card Act
prohibits any person from imposing a
dormancy, inactivity, or service fee with
respect to a gift certificate, store gift
card, or general-use prepaid card, unless
three conditions are satisfied. First, such
fees may be imposed only if there has
been no activity with respect to the
certificate or card within the one-year
period prior to the imposition of the fee
or charge. Second, only one such fee
may be assessed in a given month.
Third, disclosures regarding dormancy,
inactivity, or service fees must be
clearly and conspicuously stated on the
certificate or card, and the issuer or
vendor must provide these disclosures
before the certificate or card is
purchased.
The Credit Card Act also provides that
a gift certificate, store gift card, or
general-use prepaid card may not be
sold or issued unless the expiration date
is no less than five years after the date
of issuance (in the case of a gift
certificate) or five years after the date of
last load of funds (in the case of a store
gift card or general-use prepaid card). In
addition, the statute requires that the
terms of expiration must be clearly and
conspicuously stated on the certificate
or card.

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Any entities involved in the issuance,
distribution, or sale of gift certificates,
store gift cards, or general-use prepaid
cards (or the issuance or distribution of
loyalty, award, or promotional gift
cards) potentially are affected by this
collection of information because these
entities will be required to provide
disclosures regarding the fees imposed
in connection with these certificates or
cards and when the funds underlying a
certificate or card expire. Under the
final rule, gift certificates, store gift
cards, and general-use prepaid cards
must state certain disclosures about
dormancy, inactivity, or service fees;
expiration dates; and a telephone
number and Web site, if one is
maintained, for additional information.
Disclosures about other fees must be
provided on or with the certificate or
card. In addition, disclosures about fees
and expiration dates must be provided
to the consumer prior to purchase.
Consumers receiving loyalty, award,
and promotional gift cards also must be
given disclosures regarding applicable
fees and expiration dates.
Entities subject to the final rule will
have to review and revise disclosures
that are currently provided on or with
a certificate or card to ensure that they
accurately state any fees and expiration
dates that may apply.
The total estimated burden increase,
as well as the estimates of the burden
increase associated with each major
section of the final rule as set forth
below, represents averages for all
respondents regulated by the Federal
Reserve. The Federal Reserve expects
that the amount of time required to
implement each of the proposed
changes for a given institution may vary
based on the size and complexity of the
respondent. Furthermore, the burden
estimate for this rulemaking includes
the burden addressing overdrafts to
Regulation E, as announced in a
separate final November 2009 final
rulemaking (Docket No. R–1343).
As discussed above, on November 20,
2009, a notice of proposed rulemaking
was published in the Federal Register
(74 FR 60986). The comment period for
this notice expired on December 21,
2009. No comments specifically
addressing the paperwork burden
estimates were received. One comment
referenced PRA; however the Federal
Reserve believes the points raised were
related to regulatory burden (beyond the
scope of PRA). The estimates therefore
will remain unchanged as published in
the proposed rule.
Section 205.20(b)(2) implements the
exclusion for cards, codes, or other
devices that are reloadable and not
marketed or labeled as a gift card or gift

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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Rules and Regulations
certificate. As noted in comment
20(b)(2)–4, institutions will qualify for
this exclusion so long as they establish
and maintain policies and procedures
reasonably designed to avoid the
marketing of a prepaid card not
otherwise subject to the rule, such as a
general-purpose reloadable card, as a
gift card or gift certificate. The Federal
Reserve estimates that the 1,205
respondents regulated by the Federal
Reserve will take, on average, 40 hours
(one-business week) to review and
implement written policies and
procedures and provide training
associated with § 205.20(b)(2). The
Federal Reserve estimates the annual
one-time burden for respondents to be
48,200 hours and believes that, on a
continuing basis, respondents will take
an average of 8 hours annually to
maintain their policies and procedures.
Under § 205.20(e)(1), institutions
involved in issuing and selling
certificates or cards are required to
adopt policies and procedures to
provide consumers with a reasonable
opportunity to purchase a certificate or
card with at least five years remaining
until the certificate or card expiration
date. The Federal Reserve estimates that
the 1,205 respondents regulated by the
Federal Reserve will take, on average, 40
hours (one-business week) to implement
or modify written policies and
procedures and provide training
associated with § 205.20(e)(1). The
Federal Reserve estimates the annual
one-time burden for respondents to be
48,200 hours and believes that, on a
continuing basis, respondents would
take an average of 8 hours annually to
maintain their policies and procedures.
Under § 205.20(e)(3), three disclosures
must be stated on the certificate or card,
as applicable: (1) The terms of
expiration of the underlying funds or, if
the underlying funds do not expire, that
fact; (2) a toll-free telephone number
and, if one is maintained, a Web site
that a consumer may use to obtain a
replacement certificate or card after the
certificate or card expires, if the
underlying funds may be available; (3)
a statement that the certificate or card
expires, but the underlying funds either
do not expire or expire later than the
certificate or card, and that the
consumer may contact the issuer for a
replacement card.
For loyalty, award, or promotional gift
cards, § 205.20(a)(4)(iii) requires three
disclosures on the certificate or card, as
applicable: (1) A statement indicating
that the certificate or card is issued for
loyalty, award, or promotional
purposes; (2) the expiration date of the
underlying funds; and (3) a toll-free
telephone number and, if one is

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maintained, a Web site that a consumer
may use to obtain fee information.
The Federal Reserve estimates that the
1,205 respondents regulated by the
Federal Reserve will take, on average, 80
hours (two-business weeks) to update
their systems to revise disclosures and
redesign certificates or cards to comply
with the proposed disclosure
requirements in § 205.20(e)(3). The
Federal Reserve estimates the annual
one-time burden for respondents to be
96,400 hours and believes that, on a
continuing basis, there would be no
additional increase in burden.
The number of respondents regulated
by the Federal Reserve that sell or issue
certificates or cards subject to the final
rule is unknown. Accordingly, for
purposes of this final Paperwork
Reduction Act analysis, it is assumed
that all of the respondents regulated by
the Federal Reserve will be impacted by
the new rule. The Federal Reserve
estimates the final rule will impose a
one-time increase in the annual burden
under Regulation E for all respondents
regulated by the Federal Reserve by
192,800 hours, from 526,520 to 719,320
hours. In addition, the Federal Reserve
estimates that, on a continuing basis, the
proposed requirements would increase
the annual burden by 19,280 hours from
526,520 to 545,800 hours. The total
annual burden would increase by
212,080 hours, from 526,520 to 738,600
hours.
The other federal financial agencies
are responsible for estimating and
reporting to OMB the total paperwork
burden for the institutions for which
they have administrative enforcement
authority. They may, but are not
required to, use the Federal Reserve’s
burden estimation methodology. Using
the Federal Reserve’s method, the
current total estimated annual burden
for all persons subject to Regulation E,
including Federal Reserve-supervised
institutions would be approximately
1,403,459 hours. The above estimates
represent an average across all
respondents and reflect variations
between persons based on their size,
complexity, and practices. All covered
persons, including depository
institutions (of which there are
approximately 17,200), potentially are
affected by this collection of
information, and thus are respondents
for purposes of the PRA. The final rule
imposes a one-time increase in the
estimated annual burden for such
institutions by 2,752,000 hours. On a
continuing basis the rule will increase
in the estimated annual burden for such
institutions by 275,200 hours. The total
annual burden for the respondents
regulated by the Federal financial

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16613

agencies is estimated to be 4,430,659
hours.
The Federal Reserve has a continuing
interest in the public’s opinions of our
collections of information. At any time,
comments regarding the burden
estimate, or any other aspect of this
collection of information, including
suggestions for reducing the burden,
may be sent to: Secretary, Board of
Governors of the Federal Reserve
System, Washington, DC 20551; and to
the Office of Management and Budget,
Paperwork Reduction Project (7100–
0200), Washington, DC 20503.
List of Subjects in 12 CFR Part 205
Consumer protection, Electronic fund
transfers, Federal Reserve System,
Reporting and recordkeeping
requirements.
■ For the reasons set forth in the
preamble, the Board amends 12 CFR
part 205 and the Official Staff
Commentary, as follows:
PART 205—ELECTRONIC FUND
TRANSFERS (REGULATION E)
1. The authority citation for part 205
continues to read as follows:

■

Authority: 15 U.S.C. 1693b.

2. Section 205.3(a) is revised to read
as follows:

■

§ 205.3

Coverage.

(a) General. This part applies to any
electronic fund transfer that authorizes
a financial institution to debit or credit
a consumer’s account. Generally, this
part applies to financial institutions. For
purposes of §§ 205.3(b)(2) and (b)(3),
205.10(b), (d), and (e), 205.13, and
205.20, this part applies to any person.
*
*
*
*
*
■ 3. Section 205.4(a)(1) is revised to
read as follows:
§ 205.4 General disclosure requirements;
jointly offered services.

(a)(1) Form of disclosures. Disclosures
required under this part shall be clear
and readily understandable, in writing,
and in a form the consumer may keep,
except as otherwise provided in this
part. The disclosures required by this
part may be provided to the consumer
in electronic form, subject to
compliance with the consumer-consent
and other applicable provisions of the
Electronic Signatures in Global and
National Commerce Act (E-Sign Act) (15
U.S.C. 7001 et seq.). A financial
institution may use commonly accepted
or readily understandable abbreviations
in complying with the disclosure
requirements of this part.
*
*
*
*
*

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4. Section 205.12(b)(1) is revised to
read as follows:

■

§ 205.12

Relation to other laws.

*

*
*
*
*
(b) Preemption of inconsistent state
laws.—(1) Inconsistent requirements.
The Board shall determine, upon its
own motion or upon the request of a
state, financial institution, or other
interested party, whether the act and
this part preempt state law relating to
electronic fund transfers, or dormancy,
inactivity, or service fees, or expiration
dates in the case of gift certificates, store
gift cards, or general-use prepaid cards.
*
*
*
*
*
■ 5. Section 205.20 is added as follows:

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§ 205.20 Requirements for gift cards and
gift certificates.

(a) Definitions. For purposes of this
section, except as excluded under
paragraph (b), the following definitions
apply:
(1) Gift certificate means a card, code,
or other device that is:
(i) Issued on a prepaid basis primarily
for personal, family, or household
purposes to a consumer in a specified
amount that may not be increased or
reloaded in exchange for payment; and
(ii) Redeemable upon presentation at
a single merchant or an affiliated group
of merchants for goods or services.
(2) Store gift card means a card, code,
or other device that is:
(i) Issued on a prepaid basis primarily
for personal, family, or household
purposes to a consumer in a specified
amount, whether or not that amount
may be increased or reloaded, in
exchange for payment; and
(ii) Redeemable upon presentation at
a single merchant or an affiliated group
of merchants for goods or services.
(3) General-use prepaid card means a
card, code, or other device that is:
(i) Issued on a prepaid basis primarily
for personal, family, or household
purposes to a consumer in a specified
amount, whether or not that amount
may be increased or reloaded, in
exchange for payment; and
(ii) Redeemable upon presentation at
multiple, unaffiliated merchants for
goods or services, or usable at
automated teller machines.
(4) Loyalty, award, or promotional gift
card means a card, code, or other device
that:
(i) Is issued on a prepaid basis
primarily for personal, family, or
household purposes to a consumer in
connection with a loyalty, award, or
promotional program;
(ii) Is redeemable upon presentation
at one or more merchants for goods or
services, or usable at automated teller
machines; and

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(iii) Sets forth the following
disclosures, as applicable:
(A) A statement indicating that the
card, code, or other device is issued for
loyalty, award, or promotional
purposes, which must be included on
the front of the card, code, or other
device;
(B) The expiration date for the
underlying funds, which must be
included on the front of the card, code,
or other device;
(C) The amount of any fees that may
be imposed in connection with the card,
code, or other device, and the
conditions under which they may be
imposed, which must be provided on or
with the card, code, or other device; and
(D) A toll-free telephone number and,
if one is maintained, a Web site, that a
consumer may use to obtain fee
information, which must be included on
the card, code, or other device.
(5) Dormancy or inactivity fee. The
terms ‘‘dormancy fee’’ and ‘‘inactivity
fee’’ mean a fee for non-use of or
inactivity on a gift certificate, store gift
card, or general-use prepaid card.
(6) Service fee. The term ‘‘service fee’’
means a periodic fee for holding or use
of a gift certificate, store gift card, or
general-use prepaid card. A periodic fee
includes any fee that may be imposed
on a gift certificate, store gift card, or
general-use prepaid card from time to
time for holding or using the certificate
or card.
(7) Activity. The term ‘‘activity’’ means
any action that results in an increase or
decrease of the funds underlying a
certificate or card, other than the
imposition of a fee, or an adjustment
due to an error or a reversal of a prior
transaction.
(b) Exclusions. The terms ‘‘gift
certificate,’’ ‘‘store gift card,’’ and
‘‘general-use prepaid card’’, as defined in
paragraph (a) of this section, do not
include any card, code, or other device
that is:
(1) Useable solely for telephone
services;
(2) Reloadable and not marketed or
labeled as a gift card or gift certificate.
For purposes of this paragraph (b)(2),
the term ‘‘reloadable’’ includes a
temporary non-reloadable card issued
solely in connection with a reloadable
card, code, or other device;
(3) A loyalty, award, or promotional
gift card;
(4) Not marketed to the general
public;
(5) Issued in paper form only; or
(6) Redeemable solely for admission
to events or venues at a particular
location or group of affiliated locations,
or to obtain goods or services in
conjunction with admission to such

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events or venues, at the event or venue
or at specific locations affiliated with
and in geographic proximity to the
event or venue.
(c) Form of disclosures—(1) Clear and
conspicuous. Disclosures made under
this section must be clear and
conspicuous. The disclosures may
contain commonly accepted or readily
understandable abbreviations or
symbols.
(2) Format. Disclosures made under
this section generally must be provided
to the consumer in written or electronic
form. Written and electronic disclosures
made under this section must be in a
retainable form. Only disclosures
provided under paragraph (c)(3) of this
section may be given orally.
(3) Disclosures prior to purchase.
Before a gift certificate, store gift card,
or general-use prepaid card is
purchased, a person that issues or sells
such certificate or card must disclose to
the consumer the information required
by paragraphs (d)(2), (e)(3), and (f)(1) of
this section. The fees and terms and
conditions of expiration that are
required to be disclosed prior to
purchase may not be changed after
purchase.
(4) Disclosures on the certificate or
card. Disclosures required by
paragraphs (a)(4)(iii), (d)(2), (e)(3), and
(f)(2) of this section must be made on
the certificate or card, or in the case of
a loyalty, award, or promotional gift
card, on the card, code, or other device.
A disclosure made in an accompanying
terms and conditions document, on
packaging surrounding a certificate or
card, or on a sticker or other label
affixed to the certificate or card does not
constitute a disclosure on the certificate
or card. For an electronic certificate or
card, disclosures must be provided
electronically on the certificate or card
provided to the consumer. An issuer
that provides a code or confirmation to
a consumer orally must provide to the
consumer a written or electronic copy of
the code or confirmation promptly, and
the applicable disclosures must be
provided on the written copy of the
code or confirmation.
(d) Prohibition on imposition of fees
or charges. No person may impose a
dormancy, inactivity, or service fee with
respect to a gift certificate, store gift
card, or general-use prepaid card,
unless:
(1) There has been no activity with
respect to the certificate or card, in the
one-year period ending on the date on
which the fee is imposed;
(2) The following are stated, as
applicable, clearly and conspicuously
on the gift certificate, store gift card, or
general-use prepaid card:

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(i) The amount of any dormancy,
inactivity, or service fee that may be
charged;
(ii) How often such fee may be
assessed; and
(iii) That such fee may be assessed for
inactivity; and
(3) Not more than one dormancy,
inactivity, or service fee is imposed in
any given calendar month.
(e) Prohibition on sale of gift
certificates or cards with expiration
dates. No person may sell or issue a gift
certificate, store gift card, or general-use
prepaid card with an expiration date,
unless:
(1) The person has established
policies and procedures to provide
consumers with a reasonable
opportunity to purchase a certificate or
card with at least five years remaining
until the certificate or card expiration
date;
(2) The expiration date for the
underlying funds is at least the later of:
(i) Five years after the date the gift
certificate was initially issued, or the
date on which funds were last loaded to
a store gift card or general-use prepaid
card; or
(ii) The certificate or card expiration
date, if any;
(3) The following disclosures are
provided on the certificate or card, as
applicable:
(i) The expiration date for the
underlying funds or, if the underlying
funds do not expire, that fact;
(ii) A toll-free telephone number and,
if one is maintained, a Web site that a
consumer may use to obtain a
replacement certificate or card after the
certificate or card expires if the
underlying funds may be available; and
(iii) Except where a non-reloadable
certificate or card bears an expiration
date that is at least seven years from the
date of manufacture, a statement,
disclosed with equal prominence and in
close proximity to the certificate or card
expiration date, that:
(A) The certificate or card expires, but
the underlying funds either do not
expire or expire later than the certificate
or card, and;
(B) The consumer may contact the
issuer for a replacement card; and
(4) No fee or charge is imposed on the
cardholder for replacing the gift
certificate, store gift card, or general-use
prepaid card or for providing the
certificate or card holder with the
remaining balance in some other
manner prior to the funds expiration
date, unless such certificate or card has
been lost or stolen.
(f) Additional disclosure requirements
for gift certificates or cards. The
following disclosures must be provided

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in connection with a gift certificate,
store gift card, or general-use prepaid
card, as applicable:
(1) Fee disclosures. For each type of
fee that may be imposed in connection
with the certificate or card (other than
a dormancy, inactivity, or service fee
subject to the disclosure requirements
under paragraph (d)(2) of this section),
the following information must be
provided on or with the certificate or
card:
(i) The type of fee;
(ii) The amount of the fee (or an
explanation of how the fee will be
determined); and
(iii) The conditions under which the
fee may be imposed.
(2) Telephone number for fee
information. A toll-free telephone
number and, if one is maintained, a Web
site, that a consumer may use to obtain
information about fees described in
paragraphs (d)(2) and (f)(1) of this
section must be disclosed on the
certificate or card.
(g) Compliance dates.—(1) Effective
date for gift certificates, store gift cards,
and general-use prepaid cards. The
requirements of this section apply to
any gift certificate, store gift card, or
general-use prepaid card sold to a
consumer on or after August 22, 2010,
or provided to the consumer as a
replacement for such certificate or card.
(2) Effective date for loyalty, award, or
promotional gift cards. The
requirements in paragraph (a)(4)(iii)
apply to any card, code, or other device
provided to a consumer in connection
with a loyalty, award, or promotional
program if the period of eligibility for
such program began on or after August
22, 2010.
■ 6. In Supplement I to part 205,
■ a. Under Section 205.12 Relation to
other laws, under 12(b) Preemption of
inconsistent state laws, paragraph 1. is
revised.
■ b. Section 205.20—Requirements for
Gift Cards and Gift Certificates is added.
Supplement I to Part 205—Official Staff
Interpretations
*

*

*

*

*

Section 205.12—Relation to Other Laws

*

*

*

*

*

(b) Preemption of Inconsistent State Laws
1. Specific determinations. The regulation
prescribes standards for determining whether
state laws that govern EFTs, and state laws
regarding gift certificates, store gift cards, or
general-use prepaid cards that govern
dormancy, inactivity, or service fees, or
expiration dates, are preempted by the act
and the regulation. A state law that is
inconsistent may be preempted even if the
Board has not issued a determination.

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However, nothing in § 205.12(b) provides a
financial institution with immunity for
violations of state law if the institution
chooses not to make state disclosures and the
Board later determines that the state law is
not preempted.

*

*

*

*

*

Section 205.20—Requirements for Gift Cards
and Gift Certificates
20(a) Definitions
1. Form of card, code, or device. Section
205.20 applies to any card, code, or other
device that meets one of the definitions in
§ 205.20(a)(1) through (a)(3) (and is not
otherwise excluded by § 205.20(b)), even if it
is not issued in card form. Section 205.20
applies, for example, to an account number
or bar code that can be used to access
underlying funds. Similarly, § 205.20 applies
to a device with a chip or other embedded
mechanism that links the device to stored
funds, such as a mobile phone or sticker
containing a contactless chip that enables the
consumer to access the stored funds. A card,
code, or other device that meets the
definition in § 205.20(a)(1) through (a)(3)
includes an electronic promise (see comment
20(a)-2) as well as a promise that is not
electronic. See, however, § 205.20(b)(5). In
addition, § 205.20 applies if a merchant
issues a code that entitles a consumer to
redeem the code for goods or services,
regardless of the medium in which the code
is issued (see, however, § 205.20(b)(5)), and
whether or not it may be redeemed
electronically or in the merchant’s store.
Thus, for example, if a merchant e-mails a
code that a consumer may redeem in a
specified amount either on-line or in the
merchant’s store, that code is covered under
§ 205.20, unless one of the exclusions in
§ 205.20(b) apply.
2. Electronic promise. The term ‘‘electronic
promise’’ as used in EFTA Sections
915(a)(2)(B), (a)(2)(C), and (a)(2)(D) means a
person’s commitment or obligation
communicated or stored in electronic form
made to a consumer to provide payment for
goods or services for transactions initiated by
the consumer. The electronic promise is itself
represented by a card, code or other device
that is issued or honored by the person,
reflecting the person’s commitment or
obligation to pay. For example, if a merchant
issues a code that can be given as a gift and
that entitles the recipient to redeem the code
in an on-line transaction for goods or
services, that code represents an electronic
promise by the merchant and is a card, code,
or other device covered by § 205.20.
3. Cards, codes, or other devices
redeemable for specific goods or services.
Certain cards, codes, or other devices may be
redeemable upon presentation for a specific
good or service, or ‘‘experience,’’ such as a
spa treatment, hotel stay, or airline flight. In
other cases, a card, code, or other device may
entitle the consumer to a certain percentage
off the purchase of a good or service, such
as 20% off of any purchase in a store. Such
cards, codes, or other devices generally are
not subject to the requirements of this section
because they are not issued to a consumer ‘‘in
a specified amount’’ as required under the

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definitions of ‘‘gift certificate,’’ ‘‘store gift
card,’’ or ‘‘general-use prepaid card.’’
However, if the card, code, or other device
is issued in a specified or denominated
amount that can be applied toward the
purchase of a specific good or service, such
as a certificate or card redeemable for a spa
treatment up to $50, the card, code, or other
device is subject to this section, unless one
of the exceptions in § 205.20(b) apply. See,
e.g., § 205.20(b)(3). Similarly, if the card,
code, or other device states a specific
monetary value, such as ‘‘a $50 value,’’ the
card, code, or other device is subject to this
section, unless an exclusion in § 205.20(b)
applies.
4. Issued primarily for personal, family, or
household purposes. Section 205.20 only
applies to cards, codes, or other devices that
are sold or issued to a consumer primarily for
personal, family, or household purposes. A
card, code, or other device initially
purchased by a business is subject to this
section if the card, code, or other device is
purchased for redistribution or resale to
consumers primarily for personal, family, or
household purposes. Moreover, the fact that
a card, code, or other device may be
primarily funded by a business, for example,
in the case of certain rewards or incentive
cards, does not mean the card, code, or other
device is outside the scope of § 205.20, if the
card, code, or other device will be provided
to a consumer primarily for personal, family,
or household purposes. But see
§ 205.20(b)(3). Whether a card, code, or other
device is issued to a consumer primarily for
personal, family, or household purposes will
depend on the facts and circumstances. For
example, if a program manager purchases
store gift cards directly from an issuing
merchant and sells those cards through the
program manager’s retail outlets, such gift
cards are subject to the requirements of
§ 205.20 because the store gift cards are sold
to consumers primarily for personal, family,
or household purposes. In contrast, a card,
code, or other device generally would not be
issued to consumers primarily for personal,
family, or household purposes, and therefore
would fall outside the scope of § 205.20, if
the purchaser of the card, code, or device is
contractually prohibited from reselling or
redistributing the card, code, or device to
consumers primarily for personal, family, or
household purposes, and reasonable policies
and procedures are maintained to avoid such
sale or distribution for such purposes.
However, if an entity that has purchased
cards, codes, or other devices for business
purposes sells or distributes such cards,
codes, or other devices to consumers
primarily for personal, family, or household
purposes, that entity does not comply with
§ 205.20 if it has not otherwise met the
substantive and disclosure requirements of
the rule or unless an exclusion in § 205.20(b)
applies.
5. Examples of cards, codes, or other
devices issued for business purposes.
Examples of cards, codes, or other devices
that are issued and used for business
purposes and therefore excluded from the
definitions of ‘‘gift certificate,’’ ‘‘store gift
card,’’ or ‘‘general-use prepaid card’’ include:

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i. Cards, codes, or other devices to
reimburse employees for travel or moving
expenses.
ii. Cards, codes, or other devices for
employees to use to purchase office supplies
and other business-related items.
Paragraph 20(a)(2)—Store Gift Card
1. Relationship between ‘‘gift certificate’’
and ‘‘store gift card’’. The term ‘‘store gift
card’’ in § 205.20(a)(2) includes ‘‘gift
certificate’’ as defined in § 205.20(a)(1). For
example, a numeric or alphanumeric code
representing a specified dollar amount or
value that is electronically sent to a
consumer as a gift which can be redeemed or
exchanged by the recipient to obtain goods or
services may be both a ‘‘gift certificate’’ and
a ‘‘store gift card’’ if the specified amount or
value cannot be increased.
2. Affiliated group of merchants. The term
‘‘affiliated group of merchants’’ means two or
more affiliated merchants or other persons
that are related by common ownership or
common corporate control (see, e.g., 12 CFR
227.3(b) and 12 CFR 223.2) and that share the
same name, mark, or logo. For example, the
term includes franchisees that are subject to
a common set of corporate policies or
practices under the terms of their franchise
licenses. The term also applies to two or
more merchants or other persons that agree
among themselves, by contract or otherwise,
to redeem cards, codes, or other devices
bearing the same name, mark, or logo (other
than the mark, logo, or brand of a payment
network), for the purchase of goods or
services solely at such merchants or persons.
For example, assume a movie theatre chain
and a restaurant chain jointly agree to issue
cards that share the same ‘‘Flix and Food’’
logo that can be redeemed solely towards the
purchase of movie tickets or concessions at
any of the participating movie theatres, or
towards the purchase of food or beverages at
any of the participating restaurants. For
purposes of § 205.20, the movie theatre chain
and the restaurant chain would be
considered to be an affiliated group of
merchants, and the cards are considered to be
‘‘store gift cards.’’ However, merchants or
other persons are not considered to be
affiliated merely because they agree to accept
a card that bears the mark, logo, or brand of
a payment network.
3. Mall gift cards. See comment 20(a)(3)–
2.
Paragraph 20(a)(3)—General-Use Prepaid
Card
1. Redeemable upon presentation at
multiple, unaffiliated merchants. A card,
code, or other device is redeemable upon
presentation at multiple, unaffiliated
merchants if, for example, such merchants
agree to honor the card, code, or device if it
bears the mark, logo, or brand of a payment
network, pursuant to the rules of the
payment network.
2. Mall gift cards. Mall gift cards that are
intended to be used or redeemed for goods
or services at participating retailers within a
shopping mall may be considered store gift
cards or general-use prepaid cards depending
on the merchants with which the cards may
be redeemed. For example, if a mall card may
only be redeemed at merchants within the

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mall itself, the card is more likely to be
redeemable at an affiliated group of
merchants and considered a store gift card.
However, certain mall cards also carry the
brand of a payment network and can be used
at any retailer that accepts that card brand,
including retailers located outside of the
mall. Such cards are considered general-use
prepaid cards.
Paragraph 20(a)(4)—Loyalty, Award, or
Promotional Gift Card
1. Examples of loyalty, award, or
promotional programs. Examples of loyalty,
award or promotional programs under
§ 205.20(a)(4) include, but are not limited to:
i. Consumer retention programs operated
or administered by a merchant or other
person that provide to consumers cards or
coupons redeemable for or towards goods or
services or other monetary value as a reward
for purchases made or for visits to the
participating merchant;
ii. Sales promotions operated or
administered by a merchant or product
manufacturer that provide coupons or
discounts redeemable for or towards goods or
services or other monetary value.
iii. Rebate programs operated or
administered by a merchant or product
manufacturer that provide cards redeemable
for or towards goods or services or other
monetary value to consumers in connection
with the consumer’s purchase of a product or
service and the consumer’s completion of the
rebate submission process.
iv. Sweepstakes or contests that distribute
cards redeemable for or towards goods or
services or other monetary value to
consumers as an invitation to enter into the
promotion for a chance to win a prize.
v. Referral programs that provide cards
redeemable for or towards goods or services
or other monetary value to consumers in
exchange for referring other potential
consumers to a merchant.
vi. Incentive programs through which an
employer provides cards redeemable for or
towards goods or services or other monetary
value to employees, for example, to recognize
job performance, such as increased sales, or
to encourage employee wellness and safety.
vii. Charitable or community relations
programs through which a company provides
cards redeemable for or towards goods or
services or other monetary value to a charity
or community group for their fundraising
purposes, for example, as a reward for a
donation or as a prize in a charitable event.
2. Issued for loyalty, award, or promotional
purposes. To indicate that a card, code, or
other device is issued for loyalty, award, or
promotional purposes as required by
§ 205.20(a)(4)(iii), it is sufficient for the card,
code, or other device to state on the front, for
example, ‘‘Reward’’ or ‘‘Promotional.’’
3. Reference to toll-free number and Web
site. If a card, code, or other device issued in
connection with a loyalty, award, or
promotional program does not have any fees,
the disclosure under § 205.20(a)(4)(iii)(D) is
not required on the card, code, or other
device.
Paragraph 20(a)(6)—Service Fee
1. Service fees. Under § 205.20(a)(6), a
service fee includes a periodic fee for holding

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or use of a gift certificate, store gift card, or
general-use prepaid card. A periodic fee
includes any fee that may be imposed on a
gift certificate, store gift card, or general-use
prepaid card from time to time for holding
or using the certificate or card, such as a
monthly maintenance fee, a transaction fee,
an ATM fee, a reload fee, a foreign currency
transaction fee, or a balance inquiry fee,
whether or not the fee is waived for a certain
period of time or is only imposed after a
certain period of time. A service fee does not
include a one-time fee or a fee that is
unlikely to be imposed more than once while
the underlying funds are still valid, such as
an initial issuance fee, a cash-out fee, a
supplemental card fee, or a lost or stolen
certificate or card replacement fee.
Paragraph 20(a)(7)—Activity
1. Activity. Under § 205.20(a)(7), any action
that results in an increase or decrease of the
funds underlying a gift certificate, store gift
card, or general-use prepaid card, other than
the imposition of a fee, or an adjustment due
to an error or a reversal of a prior transaction,
constitutes activity for purposes of § 205.20.
For example, the purchase and activation of
a certificate or card, the use of the certificate
or card to purchase a good or service, or the
reloading of funds onto a store gift card or
general-use prepaid card constitutes activity.
However, the imposition of a fee, the
replacement of an expired, lost, or stolen
certificate or card, and a balance inquiry do
not constitute activity. In addition, if a
consumer attempts to engage in a transaction
with a gift certificate, store gift card, or
general-use prepaid card, but the transaction
cannot be completed due to technical or
other reasons, such attempt does not
constitute activity. Furthermore, if the funds
underlying a gift certificate, store gift card, or
general-use prepaid card are adjusted
because there was an error or the consumer
has returned a previously purchased good,
the adjustment also does not constitute
activity with respect to the certificate or card.
20(b) Exclusions
1. Application of exclusion. A card, code,
or other device is excluded from the
definition of ‘‘gift certificate,’’ ‘‘store gift
card,’’ or ‘‘general-use prepaid card’’ if it
meets any of the exclusions in § 205.20(b).
An excluded card, code, or other device
generally is not subject to any of the
requirements of this section. (See, however,
§ 205.20(a)(4)(iii), requiring certain
disclosures for loyalty, award, or promotional
gift cards.)
2. Eligibility for multiple exclusions. A
card, code, or other device may qualify for
one or more exclusions. For example, a
corporation may give its employees a gift
card that is marketed solely to businesses for
incentive-related purposes, such as to reward
job performance or promote employee safety.
In this case, the card may qualify for the
exclusion for loyalty, award, or promotional
gift cards under § 205.20(b)(3), or for the
exclusion for cards, codes, or other devices
not marketed to the general public under
§ 205.20(b)(4). In addition, as long as any one
of the exclusions applies, a card, code, or
other device is not covered by § 205.20, even
if other exclusions do not apply. In the above

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example, the corporation may give its
employees a type of gift card that can also be
purchased by a consumer directly from a
merchant. Under these circumstances, while
the card does not qualify for the exclusion for
cards, codes, or other devices not marketed
to the general public under § 205.20(b)(4)
because the card can also be obtained
through retail channels, it is nevertheless
exempt from the substantive requirements of
§ 205.20 because it is a loyalty, award, or
promotional gift card. (See, however,
§ 205.20(a)(4)(iii), requiring certain
disclosures for loyalty, award, or promotional
gift cards.) Similarly, a person may market a
reloadable card to teenagers for occasional
expenses that enables parents to monitor
spending. Although the card does not qualify
for the exclusion for cards, codes, or other
devices not marketed to the general public
under § 205.20(b)(4), it may nevertheless be
exempt from the requirements of § 205.20
under § 205.20(b)(2) if it is reloadable and not
marketed or labeled as a gift card or gift
certificate.
Paragraph 20(b)(1)—Usable Solely for
Telephone Services
1. Examples of excluded products. The
exclusion for products usable solely for
telephone services applies to prepaid cards
for long-distance telephone service, prepaid
cards for wireless telephone service and
prepaid cards for other services that function
similar to telephone services, such as prepaid
cards for voice over internet protocol (VoIP)
access time.
Paragraph 20(b)(2)—Reloadable and Not
Marketed or Labeled as a Gift Card or Gift
Certificate
1. Reloadable. A card, code, or other device
is ‘‘reloadable’’ if the terms and conditions of
the agreement permit funds to be added to
the card, code, or other device after the initial
purchase or issuance. A card, code, or other
device is not ‘‘reloadable’’ merely because the
issuer or processor is technically able to add
functionality that would otherwise enable the
card, code, or other device to be reloaded.
2. Marketed or labeled as a gift card or gift
certificate. The term ‘‘marketed or labeled as
a gift card or gift certificate’’ means directly
or indirectly offering, advertising or
otherwise suggesting the potential use of a
card, code or other device, as a gift for
another person. Whether the exclusion
applies generally does not depend on the
type of entity that makes the promotional
message. For example, a card may be
marketed or labeled as a gift card or gift
certificate if anyone (other than the purchaser
of the card), including the issuer, the retailer,
the program manager that may distribute the
card, or the payment network on which a
card is used, promotes the use of the card as
a gift card or gift certificate. A card, code, or
other device, including a general-purpose
reloadable card, is marketed or labeled as a
gift card or gift certificate even if it is only
occasionally marketed as a gift card or gift
certificate. For example, a network-branded
general purpose reloadable card would be
marketed or labeled as a gift card or gift
certificate if the issuer principally advertises
the card as a less costly alternative to a bank
account but promotes the card in a television,

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radio, newspaper, or Internet advertisement,
or on signage as ‘‘the perfect gift’’ during the
holiday season. However, the mere mention
of the availability of gift cards or gift
certificates in an advertisement or on a sign
that also indicates the availability of other
excluded prepaid cards does not by itself
cause the excluded prepaid cards to be
marketed as a gift card or a gift certificate.
For example, the posting of a sign in a store
that refers to the availability of gift cards does
not by itself constitute the marketing of
otherwise excluded prepaid cards that may
also be sold in the store as gift cards or gift
certificates, provided that a consumer acting
reasonably under the circumstances would
not be led to believe that the sign applies to
all prepaid cards sold in the store. (See,
however, comment 20(b)(2)–4.ii.)
3. Examples of marketed or labeled as a
gift card or gift certificate.
i. Examples of marketed or labeled as a gift
card or gift certificate include:
A. Using the word ‘‘gift’’ or ‘‘present’’ on a
card, certificate, or accompanying material,
including documentation, packaging and
promotional displays;
B. Representing or suggesting that a
certificate or card can be given to another
person, for example, as a ‘‘token of
appreciation’’ or a ‘‘stocking stuffer,’’ or
displaying a congratulatory message on the
card, certificate or accompanying material;
C. Incorporating gift-giving or celebratory
imagery or motifs, such as a bow, ribbon,
wrapped present, candle, or congratulatory
message, on a card, certificate, accompanying
documentation, or promotional material;
ii. The term does not include:
A. Representing that a card or certificate
can be used as a substitute for a checking,
savings, or deposit account;
B. Representing that a card or certificate
can be used to pay for a consumer’s healthrelated expenses—for example, a card tied to
a health savings account;
C. Representing that a card or certificate
can be used as a substitute for travelers
checks or cash;
D. Representing that a card or certificate
can be used as a budgetary tool, for example,
by teenagers, or to cover emergency
expenses.
4. Reasonable policies and procedures to
avoid marketing as a gift card. The exclusion
for a card, code, or other device that is
reloadable and not marketed or labeled as a
gift card or gift certificate in § 205.20(b)(2)
applies if a reloadable card, code, or other
device is not marketed or labeled as a gift
card or gift certificate and if persons subject
to the rule, including issuers, program
managers, and retailers, maintain policies
and procedures reasonably designed to avoid
such marketing. Such policies and
procedures may include contractual
provisions prohibiting a reloadable card,
code, or other device from being marketed or
labeled as a gift card or gift certificate,
merchandising guidelines or plans regarding
how the product must be displayed in a retail
outlet, and controls to regularly monitor or
otherwise verify that the card, code or other
device is not being marketed as a gift card.
Whether a reloadable card, code, or other
device has been marketed as a gift card or gift

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certificate will depend on the facts and
circumstances, including whether a
reasonable consumer would be led to believe
that the card, code, or other device is a gift
card or gift certificate. The following
examples illustrate the application of
§ 205.20(b)(2):
i. An issuer or program manager of prepaid
cards agrees to sell general-purpose
reloadable cards through a retailer. The
contract between the issuer or program
manager and the retailer establishes the terms
and conditions under which the cards may
be sold and marketed at the retailer. The
terms and conditions prohibit the generalpurpose reloadable cards from being
marketed as a gift card or gift certificate, and
require policies and procedures to regularly
monitor or otherwise verify that the cards are
not being marketed as such. The issuer or
program manager sets up one promotional
display at the retailer for gift cards and
another physically separated display for
excluded products under § 205.20(b),
including general-purpose reloadable cards
and wireless telephone cards, such that a
reasonable consumer would not believe that
the excluded cards are gift cards. The
exclusion in § 205.20(b)(2) applies because
policies and procedures reasonably designed
to avoid the marketing of the general-purpose
reloadable cards as gift cards or gift
certificates are maintained, even if a retail
clerk inadvertently stocks or a consumer
inadvertently places a general-purpose
reloadable card on the gift card display.
ii. Same facts as in i., except that the issuer
or program manager sets up a single
promotional display at the retailer on which
a variety of prepaid cards are sold, including
store gift cards and general-purpose
reloadable cards. A sign stating ‘‘Gift Cards’’
appears prominently at the top of the display.
The exclusion in § 205.20(b)(2) does not
apply with respect to the general-purpose
reloadable cards because policies and
procedures reasonably designed to avoid the
marketing of excluded cards as gift cards or
gift certificates are not maintained.
iii. Same facts as in i., except that the
issuer or program manager sets up a single
promotional multi-sided display at the
retailer on which a variety of prepaid card
products, including store gift cards and
general-purpose reloadable cards are sold.
Gift cards are segregated from excluded
cards, with gift cards on one side of the
display and excluded cards on a different
side of a display. Signs of equal prominence
at the top of each side of the display clearly
differentiate between gift cards and the other
types of prepaid cards that are available for
sale. The retailer does not use any more
conspicuous signage suggesting the general
availability of gift cards, such as a large sign
stating ‘‘Gift Cards’’ at the top of the display
or located near the display. The exclusion in
§ 205.20(b)(2) applies because policies and
procedures reasonably designed to avoid the
marketing of the general-purpose reloadable
cards as gift cards or gift certificates are
maintained, even if a retail clerk
inadvertently stocks or a consumer
inadvertently places a general-purpose
reloadable card on the gift card display.
iv. Same facts as in i., except that the
retailer sells a variety of prepaid card

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products, including store gift cards and
general-purpose reloadable cards, arranged
side-by-side in the same checkout lane. The
retailer does not affirmatively indicate or
represent that gift cards are available, such as
by displaying any signage or other indicia at
the checkout lane suggesting the general
availability of gift cards. The exclusion in
§ 205.20(b)(2) applies because policies and
procedures reasonably designed to avoid
marketing the general-purpose reloadable
cards as gift cards or gift certificates are
maintained.
5. On-line sales of prepaid cards. Some
Web sites may prominently advertise or
promote the availability of gift cards or gift
certificates in a manner that suggests to a
consumer that the Web site exclusively sells
gift cards or gift certificates. For example, a
Web site may display a banner advertisement
or a graphic on the home page that
prominently states ‘‘Gift Cards,’’ ‘‘Gift Giving,’’
or similar language without mention of other
available products, or use a Web address that
includes only a reference to gift cards or gift
certificates in the address. In such a case, a
consumer acting reasonably under the
circumstances could be led to believe that all
prepaid products sold on the Web site are gift
cards or gift certificates. Under these facts,
the Web site has marketed all such products,
including general-purpose reloadable cards,
as gift cards or gift certificates, and the
exclusion in § 205.20(b)(2) does not apply.
6. Temporary non-reloadable cards issued
in connection with a general-purpose
reloadable card. Certain general-purpose
reloadable cards that are typically marketed
as an account substitute initially may be sold
or issued in the form of a temporary nonreloadable card. After the card is purchased,
the cardholder is typically required to call
the issuer to register the card and to provide
identifying information in order to obtain a
reloadable replacement card. In most cases,
the temporary non-reloadable card can be
used for purchases until the replacement
reloadable card arrives and is activated by
the cardholder. Because the temporary nonreloadable card may only be obtained in
connection with the general-purpose
reloadable card, the exclusion in
§ 205.20(b)(2) applies so long as the card is
not marketed as a gift card or gift certificate.
Paragraph 20(b)(4)—Not Marketed to the
General Public
1. Marketed to the general public. A card,
code, or other device is marketed to the
general public if the potential use of the card,
code, or other device is directly or indirectly
offered, advertised, or otherwise promoted to
the general public. A card, code, or other
device may be marketed to the general public
through any advertising medium, including
television, radio, newspaper, the Internet, or
signage. However, the posting of a company
policy that funds may be disbursed by
prepaid card (such as a sign posted at a cash
register or customer service center stating
that store credit will be issued by prepaid
card) does not constitute the marketing of a
card, code, or other device to the general
public. In addition, the method of
distribution by itself is not dispositive in
determining whether a card, code, or other
device is marketed to the general public.

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Factors that may be considered in
determining whether the exclusion applies to
a particular card, code, or other device
include the means or channel through which
the card, code, or device may be obtained by
a consumer, the subset of consumers that are
eligible to obtain the card, code, or device,
and whether the availability of the card,
code, or device is advertised or otherwise
promoted in the marketplace.
2. Examples. The following examples
illustrate the application of the exclusion in
§ 205.20(b)(4):
i. A merchant sells its gift cards at a
discount to a business which may give them
to employees or loyal consumers as
incentives or rewards. In determining
whether the gift card falls within the
exclusion in § 205.20(b)(4), the merchant
must consider whether the card is of a type
that is advertised or made available to
consumers generally or can be obtained
elsewhere. If the card can also be purchased
through retail channels, the exclusion in
§ 205.20(b)(4) does not apply, even if the
consumer obtained the card from the
business as an incentive or reward. See,
however, § 205.20(b)(3).
ii. A national retail chain decides to market
its gift cards only to members of its frequent
buyer program. Similarly, a bank may decide
to sell gift cards only to its customers. If a
member of the general public may become a
member of the program or a customer of the
bank, the card does not fall within the
exclusion in § 205.20(b)(4) because the
general public has the ability to obtain the
cards. See, however, § 205.20(b)(3).
iii. A card issuer advertises a reloadable
card to teenagers and their parents promoting
the card for use by teenagers for occasional
expenses, schoolbooks and emergencies and
by parents to monitor spending. Because the
card is marketed to and may be sold to any
member of the general public, the exclusion
in § 205.20(b)(4) does not apply. See,
however, § 205.20(b)(2).
iv. An insurance company settles a
policyholder’s claim and distributes the
insurance proceeds to the consumer by
means of a prepaid card. Because the prepaid
card is simply the means for providing the
insurance proceeds to the consumer and the
availability of the card is not advertised to
the general public, the exclusion in
§ 205.20(b)(4) applies.
v. A merchant provides store credit to a
consumer following a merchandise return by
issuing a prepaid card that clearly indicates
that the card contains funds for store credit.
Because the prepaid card is issued for the
stated purpose of providing store credit to the
consumer and the ability to receive refunds
by a prepaid card is not advertised to the
general public, the exclusion in § 205.20(b)(4)
applies.
vi. A tax preparation company elects to
distribute tax refunds to its clients by issuing
prepaid cards, but does not advertise or
otherwise promote the ability to receive
proceeds in this manner. Because the prepaid
card is simply the mechanism for providing
the tax refund to the consumer, and the tax
preparer does not advertise the ability to
obtain tax refunds by a prepaid card, the
exclusion in § 205.20(b)(4) applies. However,

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if the tax preparer promotes the ability to
receive tax refund proceeds through a
prepaid card as a way to obtain ‘‘faster’’
access to the proceeds, the exclusion in
§ 205.20(b)(4) does not apply.
Paragraph 20(b)(5)—Issued in Paper Form
Only
1. Exclusion explained. To qualify for the
exclusion in § 205.20(b)(5), the sole means of
issuing the card, code, or other device must
be in a paper form. Thus, the exclusion
generally applies to certificates issued in
paper form where solely the paper itself may
be used to purchase goods or services. A
card, code or other device is not issued solely
in paper form simply because it may be
reproduced or printed on paper. For
example, a bar code, card or certificate
number, or certificate or coupon
electronically provided to a consumer and
redeemable for goods and services is not
issued in paper form, even if it may be
reproduced or otherwise printed on paper by
the consumer. In this circumstance, although
the consumer might hold a paper facsimile of
the card, code, or other device, the exclusion
does not apply because the information
necessary to redeem the value was initially
issued in electronic form. A paper certificate
is within the exclusion regardless of whether
it may be redeemed electronically. For
example, a paper certificate or receipt that
bears a bar code, code, or account number
falls within the exclusion in § 205.20(b)(5) if
the bar code, code, or account number is not
issued in any form other than on the paper.
In addition, the exclusion in § 205.20(b)(5)
continues to apply in circumstances where
an issuer replaces a gift certificate that was
initially issued in paper form with a card or
electronic code (for example, to replace a lost
paper certificate).
2. Examples. The following examples
illustrate the application of the exclusion in
§ 205.20(b)(5):
i. A merchant issues a paper gift certificate
that entitles the bearer to a specified dollar
amount that can be applied towards a future
meal. The merchant fills in the certificate
with the name of the certificate holder and
the amount of the certificate. The certificate
falls within the exclusion in § 205.20(b)(5)
because it is issued in paper form only.
ii. A merchant allows a consumer to
prepay for a good or service, such as a car
wash or time at a parking meter, and issues
a paper receipt bearing a numerical or bar
code that the consumer may redeem to obtain
the good or service. The exclusion in
§ 205.20(b)(5) applies because the code is
issued in paper form only.
iii. A merchant issues a paper certificate or
receipt bearing a bar code or certificate
number that can later be scanned or entered
into the merchant’s system and redeemed by
the certificate or receipt holder towards the
purchase of goods or services. The bar code
or certificate number is not issued by the
merchant in any form other than paper. The
exclusion in § 205.20(b)(5) applies because
the bar code or certificate number is issued
in paper form only.
iv. An on-line merchant electronically
provides a bar code, card or certificate
number, or certificate or coupon to a
consumer that the consumer may print on a

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home printer and later redeem towards the
purchase of goods or services. The exclusion
in § 205.20(b)(5) does not apply because the
bar code or card or certificate number was
issued to the consumer in electronic form,
even though it can be reproduced or
otherwise printed on paper by the consumer.
Paragraph 20(b)(6)—Redeemable Solely for
Admission to Events or Venues
1. Exclusion explained. The exclusion for
cards, codes, or other devices that are
redeemable solely for admission to events or
venues at a particular location or group of
affiliated locations generally applies to cards,
codes, or other devices that are not redeemed
for a specified monetary value, but rather
solely for admission or entry to an event or
venue. The exclusion also covers a card,
code, or other device that is usable to
purchase goods or services in addition to
entry into the event or the venue, either at
the event or venue or at an affiliated location
or location in geographic proximity to the
event or venue.
2. Examples. The following examples
illustrate the application of the exclusion in
§ 205.20(b)(6):
i. A consumer purchases a prepaid card
that entitles the holder to a ticket for entry
to an amusement park. The prepaid card may
only be used for entry to the park. The card
qualifies for the exclusion in § 205.20(b)(6)
because it is redeemable for admission or
entry and for goods or services in
conjunction with that admission. In addition,
if the prepaid card does not have a monetary
value, and therefore is not ‘‘issued in a
specified amount,’’ the card does not meet the
definitions of ‘‘gift certificate,’’ ‘‘store gift
card,’’ or ‘‘general-use prepaid card’’ in
§ 205.20(a). See comment 20(a)–3.
ii. Same facts as in i., except that the gift
card also entitles the holder of the gift card
to a dollar amount that can be applied
towards the purchase of food and beverages
or goods or services at the park or at nearby
affiliated locations. The card qualifies for the
exclusion in § 205.20(b)(6) because it is
redeemable for admission or entry and for
goods or services in conjunction with that
admission.
iii. A consumer purchases a $25 gift card
that the holder of the gift card can use to
make purchases at a merchant, or,
alternatively, can apply towards the cost of
admission to the merchant’s affiliated
amusement park. The card is not eligible for
the exclusion in § 205.20(b)(6) because it is
not redeemable solely for the admission or
ticket itself (or for goods and services
purchased in conjunction with such
admission). The card meets the definition of
‘‘store gift card’’ and is therefore subject to
§ 205.20, unless a different exclusion applies.
20(c) Form of Disclosures
Paragraph 20(c)(1)—Clear and Conspicuous
1. Clear and conspicuous standard. All
disclosures required by this section must be
clear and conspicuous. Disclosures are clear
and conspicuous for purposes of this section
if they are readily understandable and, in the
case of written and electronic disclosures, the
location and type size are readily noticeable
to consumers. Disclosures need not be

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located on the front of the certificate or card,
except where otherwise required, to be
considered clear and conspicuous.
Disclosures are clear and conspicuous for the
purposes of this section if they are in a print
that contrasts with and is otherwise not
obstructed by the background on which they
are printed. For example, disclosures on a
card or computer screen are not likely to be
conspicuous if obscured by a logo printed in
the background. Similarly, disclosures on the
back of a card that are printed on top of
indentations from embossed type on the front
of the card are not likely to be conspicuous
if the indentations obstruct the readability of
the disclosures. To the extent permitted, oral
disclosures meet the standard when they are
given at a volume and speed sufficient for a
consumer to hear and comprehend them.
2. Abbreviations and symbols. Disclosures
may contain commonly accepted or readily
understandable abbreviations or symbols,
such as ‘‘mo.’’ for month or a ‘‘/’’ to indicate
‘‘per.’’ Under the clear and conspicuous
standard, it is sufficient to state, for example,
that a particular fee is charged ‘‘$2.50/mo.
after 12 mos.’’
Paragraph 20(c)(2)—Format
1. Electronic disclosures. Disclosures
provided electronically pursuant to this
section are not subject to compliance with
the consumer consent and other applicable
provisions of the Electronic Signatures in
Global and National Commerce Act (E-Sign
Act) (15 USC 7001 et seq.). Electronic
disclosures must be in a retainable form. For
example, a person may satisfy the
requirement if it provides an online
disclosure in a format that is capable of being
printed. Electronic disclosures may not be
provided through a hyperlink or in another
manner by which the purchaser can bypass
the disclosure. A person is not required to
confirm that the consumer has read the
electronic disclosures.
Paragraph 20(c)(3)—Disclosure Prior to
Purchase
1. Method of purchase. The disclosures
required by this paragraph must be provided
before a certificate or card is purchased
regardless of whether the certificate or card
is purchased in person, online, by telephone,
or by other means.
2. Electronic disclosures. Section
205.20(c)(3) provides that the disclosures
required by this section must be provided to
the consumer prior to purchase. For
certificates or cards purchased electronically,
disclosures made to the consumer after a
consumer has initiated an online purchase of
a certificate or card, but prior to completing
the purchase of the certificate or card, would
satisfy the prior-to-purchase requirement.
However, electronic disclosures made
available on a person’s Web site that may or
may not be accessed by the consumer are not
provided to the consumer and therefore
would not satisfy the prior-to-purchase
requirement.
3. Non-physical certificates and cards. If
no physical certificate or card is issued, the
disclosures must be provided to the
consumer before the certificate or card is
purchased. For example, where a gift
certificate or card is a code that is provided

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by telephone, the required disclosures may
be provided orally prior to purchase. See also
§ 205.20(c)(2).
Paragraph 20(c)(4)—Disclosures on the
Certificate or Card
1. Non-physical certificates and cards. If
no physical certificate or card is issued, the
disclosures required by this paragraph must
be disclosed on the code, confirmation, or
other written or electronic document
provided to the consumer. For example,
where a gift certificate or card is a code or
confirmation that is provided to a consumer
on-line or sent to a consumer’s e-mail
address, the required disclosures may be
provided electronically on the same
document as the code or confirmation.
2. No disclosures on a certificate or card.
Disclosures required by § 205.20(c)(4) need
not be made on a certificate or card if it is
accompanied by a certificate or card that
complies with this section. For example, a
person may issue or sell a supplemental gift
card that is smaller than a standard size and
that does not bear the applicable disclosures
if it is accompanied by a fully compliant
certificate or card. See also comment
20(c)(2)–2.
20(d) Prohibition on Imposition of Fees or
Charges
1. One-year period. Section 205.20(d)
provides that a person may impose a
dormancy, inactivity, or service fee only if
there has been no activity with respect to a
certificate or card for one year. The following
examples illustrate this rule:
i. A certificate or card is purchased on
January 15 of year one. If there has been no
activity on the certificate or card since the
certificate or card was purchased, a
dormancy, inactivity, or service fee may be
imposed on the certificate or card on January
15 of year two.
ii. Same facts as i., and a fee was imposed
on January 15 of year two. Because no more
than one dormancy, inactivity, or service fee
may be imposed in any given calendar
month, the earliest date that another
dormancy, inactivity, or service fee may be
imposed, assuming there continues to be no
activity on the certificate or card, is February
1 of year two. A dormancy, inactivity, or
service fee is permitted to be imposed on
February 1 of year two because there has
been no activity on the certificate or card for
the preceding year (February 1 of year one
through January 31 of year two), and
February is a new calendar month. The
imposition of a fee on January 15 of year two
is not activity for purposes of § 205.20(d). See
comment 20(a)(7)–1.
iii. Same facts as i., and a fee was imposed
on January 15 of year two. On January 31 of
year two, the consumer uses the card to make
a purchase. Another dormancy, inactivity, or
service fee could not be imposed until
January 31 of year three, assuming there has
been no activity on the certificate or card
since January 31 of year two.
2. Relationship between §§ 205.20(d)(2)
and (c)(3). Sections 205.20(d)(2) and (c)(3)
contain similar, but not identical, disclosure
requirements. Section 205.20(d)(2) requires
the disclosure of dormancy, inactivity, and
service fees on a certificate or card. Section

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205.20(c)(3) requires that vendor person that
issues or sells such certificate or card
disclose to a consumer any dormancy,
inactivity, and service fees associated with
the certificate or card before such certificate
or card may be purchased. Depending on the
context, a single disclosure that meets the
clear and conspicuous requirements of both
§§ 205.20(d)(2) and (c)(3) may be used to
disclose a dormancy, inactivity, or service
fee. For example, if the disclosures on a
certificate or card, required by § 205.20(d)(2),
are visible to the consumer without having to
remove packaging or other materials sold
with the certificate or card, for a purchase
made in person, the disclosures also meet the
requirements of § 205.20(c)(3). Otherwise, a
dormancy, inactivity, or service fee may need
to be disclosed multiple times to satisfy the
requirements of §§ 205.20(d)(2) and (c)(3).
For example, if the disclosures on a
certificate or card, required by § 205.20(d)(2),
are obstructed by packaging sold with the
certificate or card, for a purchase made in
person, they also must be disclosed on the
packaging sold with the certificate or card to
meet the requirements of § 205.20(c)(3).
3. Relationship between §§ 205.20(d)(2),
(e)(3), and (f)(2). In addition to any
disclosures required under § 205.20(d)(2),
any applicable disclosures under
§§ 205.20(e)(3) and (f)(2) of this section must
also be provided on the certificate or card.
4. One fee per month. Under § 205.20(d)(3),
no more than one dormancy, inactivity, or
service fee may be imposed in any given
calendar month. For example, if a dormancy
fee is imposed on January 1, following a year
of inactivity, and a consumer makes a
balance inquiry on January 15, a balance
inquiry fee may not be imposed at that time
because a dormancy fee was already imposed
earlier that month and a balance inquiry fee
is a type of service fee. If, however, the
dormancy fee could be imposed on January
1, following a year of inactivity, and the
consumer makes a balance inquiry on the
same date, the person assessing the fees may
choose whether to impose the dormancy fee
or the balance inquiry fee on January 1. The
restriction in § 205.20(d)(3) does not apply to
any fee that is not a dormancy, inactivity, or
service fee. For example, assume a service fee
is imposed on a general-use prepaid card on
January 1, following a year of inactivity. If a
consumer cashes out the remaining funds by
check on January 15, a cash-out fee, to the
extent such cash-out fee is permitted under
§ 205.20(e)(4), may be imposed at that time
because a cash-out fee is not a dormancy,
inactivity, or service fee.
5. Accumulation of fees. Section 205.20(d)
prohibits the accumulation of dormancy,
inactivity, or service fees for previous periods
into a single fee because such a practice
would circumvent the limitation in
§ 205.20(d)(3) that only one fee may be
charged per month. For example, if a
consumer purchases and activates a store gift
card on January 1 but never uses the card, a
monthly maintenance fee of $2.00 a month
may not be accumulated such that a fee of
$24 is imposed on January 1 the following
year.

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20(e) Prohibition on Sale of Gift Certificates
or Cards With Expiration Dates
1. Reasonable opportunity. Under
§ 205.20(e)(1), no person may sell or issue a
gift certificate, store gift card, or general-use
prepaid card with an expiration date, unless
there are policies and procedures in place to
provide consumers with a reasonable
opportunity to purchase a certificate or card
with at least five years remaining until the
certificate or card expiration date. Consumers
are deemed to have a reasonable opportunity
to purchase a certificate or card with at least
five years remaining until the certificate or
card expiration date if:
i. There are policies and procedures
established to prevent the sale of a certificate
or card unless the certificate or card
expiration date is at least five years after the
date the certificate or card was sold or
initially issued to a consumer; or
ii. A certificate or card is available to
consumers to purchase five years and six
months before the certificate or card
expiration date.
2. Applicability to replacement certificates
or cards. Section 205.20(e)(1) applies solely
to the purchase of a certificate or card.
Therefore, § 205.20(e)(1) does not apply to
the replacement of such certificates or cards.
Certificates or cards issued as a replacement
may bear a certificate or card expiration date
of less than five years from the date of
issuance of the replacement certificate or
card. If the certificate or card expiration date
for a replacement certificate or card is later
than the date set forth in § 205.20(e)(2)(i),
then pursuant to § 205.20(e)(2), the
expiration date for the underlying funds at
the time the replacement certificate or card
is issued must be no earlier than the
expiration date for the replacement certificate
or card. For purposes of § 205.20(e)(2), funds
are not considered to be loaded to a store gift
card or general-use prepaid card solely
because a replacement card has been issued
or activated for use.
3. Disclosure of funds expiration—date not
required. Section 205.20(e)(3)(i) does not
require disclosure of the precise date the
funds will expire. It is sufficient to disclose,
for example, ‘‘Funds expire 5 years from the
date funds last loaded to the card.’’; ‘‘Funds
can be used 5 years from the date money was
last added to the card.’’; or ‘‘Funds do not
expire.’’
4. Disclosure not required if no expiration
date. If the certificate or card and underlying
funds do not expire, the disclosure required
by § 205.20(e)(3)(i) need not be stated on the
certificate or card. If the certificate or card
and underlying funds expire at the same
time, only one expiration date need be
disclosed on the certificate or card.
5. Reference to toll-free telephone number
and Web site. If a certificate or card does not
expire, or if the underlying funds are not
available after the certificate or card expires,
the disclosure required by § 205.20(e)(3)(ii)
need not be stated on the certificate or card.
See, however, § 205.20(f)(2).
6. Relationship to § 226.20(f)(2). The same
toll-free telephone number and Web site may
be used to comply with §§ 226.20(e)(3)(ii)
and (f)(2). Neither a toll-free number nor a
Web site must be maintained or disclosed if

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no fees are imposed in connection with a
certificate or card, and the certificate or card
and the underlying funds do not expire.
7. Distinguishing between certificate or
card expiration and funds expiration. If
applicable, a disclosure must be made on the
certificate or card that notifies a consumer
that the certificate or card expires, but the
funds either do not expire or expire later than
the certificate or card, and that the consumer
may contact the issuer for a replacement
card. The disclosure must be made with
equal prominence and in close proximity to
the certificate or card expiration date. The
close proximity requirement does not apply
to oral disclosures. In the case of a certificate
or card, close proximity means that the
disclosure must be on the same side as the
certificate or card expiration date. For
example, if the disclosure is the same type
size and is located immediately next to or
directly above or below the certificate or card
expiration date, without any intervening text
or graphical displays, the disclosures would
be deemed to be equally prominent and in
close proximity. The disclosure need not be
embossed on the certificate or card to be
deemed equally prominent, even if the
expiration date is embossed on the certificate
or card. The disclosure may state on the front
of the card, for example, ‘‘Funds expire after
card. Call for replacement card.’’ or ‘‘Funds
do not expire. Call for new card after 09/
2016.’’ Disclosures made pursuant to
§ 205.20(e)(3)(iii)(A) may also fulfill the
requirements of § 205.20(e)(3)(i). For
example, making a disclosure that ‘‘Funds do
not expire’’ to comply with
§ 205.20(e)(3)(iii)(A) also fulfills the
requirements of § 205.20(e)(3)(i).
8. Expiration date safe harbor. A nonreloadable certificate or card that bears an
expiration date that is at least seven years
from the date of manufacture need not state
the disclosure required by § 205.20(e)(3)(iii).
However, § 205.20(e)(1) still prohibits the
sale or issuance of such certificate or card
unless there are policies and procedures in
place to provide a consumer with a
reasonable opportunity to purchase the
certificate or card with at least five years
remaining until the certificate or card
expiration date. In addition, under
§ 205.20(e)(2), the funds may not expire
before the certificate or card expiration date,
even if the expiration date of the certificate
or card bears an expiration date that is more
than five years at the date of purchase. For
purposes of this safe harbor, the date of
manufacture is the date on which the
certificate or card expiration date is printed
on the certificate or card.

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9. Relationship between §§ 205.20(d)(2),
(e)(3), and (f)(2). In addition to any
disclosures required to be made under
§ 205.20(e)(3), any applicable disclosures
under §§ 205.20(d)(2) and (f)(2) must also be
provided on the certificate or card.
10. Replacement or remaining balance of
an expired certificate or card. When a
certificate or card expires, but the underlying
funds have not expired, an issuer, at its
option in accordance with applicable state
law, may provide either a replacement
certificate or card or otherwise provide the
certificate or card holder, for example, by
check, with the remaining balance on the
certificate or card. In either case, the issuer
may not charge a fee for the service.
11. Replacement of a lost or stolen
certificate or card not required. Section
205.20(e)(4) does not require the replacement
of a certificate or card that has been lost or
stolen.
12. Date of issuance or loading. For
purposes of § 205.20(e)(2)(i), a certificate or
card is not issued or loaded with funds until
the certificate or card is activated for use.
13. Application of expiration date
provisions after redemption of certificate or
card. The requirement that funds underlying
a certificate or card must not expire for at
least five years from the date of issuance or
date of last load ceases to apply once the
certificate or card has been fully redeemed,
even if the underlying funds are not used to
contemporaneously purchase a specific good
or service. For example, some certificates or
cards can be used to purchase music, media,
or virtual goods. Once redeemed by a
consumer, the entire balance on the
certificate or card is debited from the
certificate or card and credited or transferred
to another ‘‘account’’ established by the
merchant of such goods or services. The
consumer can then make purchases of songs,
media, or virtual goods from the merchant
using that ‘‘account’’ either at the time the
value is transferred from the certificate or
card or at a later time. Under these
circumstances, once the card has been fully
redeemed and the ‘‘account’’ credited with
the amount of the underlying funds, the fiveyear minimum expiration term no longer
applies to the underlying funds. However, if
the consumer only partially redeems the
value of the certificate or card, the five-year
minimum expiration term requirement
continues to apply to the funds remaining on
the certificate or card.
20(f) Additional Disclosure Requirements for
Gift Certificates or Cards
1. Reference to toll-free telephone number
and Web site. If a certificate or card does not

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have any fees, the disclosure under
§ 205.20(f)(2) is not required on the certificate
or card. See, however, § 205.20(e)(3)(ii).
2. Relationship to § 226.20(e)(3)(ii). The
same toll-free telephone number and Web
site may be used to comply with
§§ 226.20(e)(3)(ii) and (f)(2). Neither a tollfree number nor a Web site must be
maintained or disclosed if no fees are
imposed in connection with a certificate or
card, and both the certificate or card and
underlying funds do not expire.
3. Relationship between §§ 205.20(d)(2),
(e)(3), and (f)(2). In addition to any
disclosures required pursuant to
§ 205.20(f)(2), any applicable disclosures
under §§ 205.20(d)(2) and (e)(3) must also be
provided on the certificate or card.
20(g) Compliance Dates
1. Period of eligibility for loyalty, award, or
promotional programs. For purposes of
§ 205.20(g)(2), the period of eligibility is the
time period during which a consumer must
engage in a certain action or actions to meet
the terms of eligibility for a loyalty, award,
or promotional program and obtain the card,
code, or other device. Under § 205.20(g)(2), a
gift card issued pursuant to a loyalty, award,
or promotional program that began prior to
August 22, 2010 need not state the
disclosures in § 205.20(a)(4)(iii) regardless of
whether the consumer became eligible to
receive the gift card prior to August 22, 2010,
or after that date. For example, a product
manufacturer may provide a $20 rebate card
to a consumer if the consumer purchases a
particular product and submits a fully
completed entry between January 1, 2010 and
December 31, 2010. Similarly, a merchant
may provide a $20 gift card to a consumer
if the consumer makes $200 worth of
qualifying purchases between June 1, 2010
and October 30, 2010. Under both examples,
gift cards provided pursuant to these loyalty,
award, or promotional programs need not
state the disclosures in § 205.20(a)(4)(iii) to
qualify for the exclusion in § 205.20(b)(3) for
loyalty, award, or promotional gift cards
because the period of eligibility for each
program began prior to August 22, 2010.
By order of the Board of Governors of the
Federal Reserve System, March 23, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010–6759 Filed 3–31–10; 8:45 am]
BILLING CODE 6210–01–P

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