Chief’s Column: Know what you’re getting from your gift card

Many individuals will receive gift certificates or gift cards as a present during this holiday season. The rules for use of these cards are modified periodically to protect the consumer from fraudulent practices related to the purchase or usage of these items. To help everyone understand their rights when it comes to gift cards and gift certificates, the Grafton Police Department would again like to provide the following information offered by the Mass Consumer Affairs Blog – The Official Blog of the Massachusetts Office of Consumer Affairs and Business Regulation.

Have you ever received a gift card as a present? Do you know what fees are associated with that card? Do you know when it expires? Do you know where to report if you have a problem? Many consumers buy gift cards for others, and if you are one of those recipients, educate yourself as to your rights under the law.

What Is a Gift Card?

Under Massachusetts law, gift cards and gift certificates are purchased by a buyer for use by a person other than the buyer. They are not redeemable in cash and are usable on the face amount in lieu of cash in exchange for goods or services supplied by the seller. Gift cards are not prepaid cards, debit cards, or credit cards, though they may look similar.

Fees

Generally, gift cards may have certain types of fees, including fees for activation, transactions, replacement, inactivity, and others. These fees may detract from the gift card’s value. These fees must be properly disclosed, which means the card issuer must state that a fee may be charged, the amount of the fee, and when the fee may be assessed. Look for these disclosures before you purchase the gift card.

Expiration Dates

Federal law requires that a gift card cannot expire within five years from the date of purchase, while Massachusetts state law requires a gift card to last for a minimum of seven years from the date of purchase. But which law applies? Generally, bank issued cards (Visa, MasterCard, American Express, etc.) that are redeemable at different merchant locations fall under federal law. Conversely, many merchant issued gift cards (for a particular store or restaurant) are often covered under state law.

Redemption of Value

If the gift card or certificate is of the kind which value cannot be added to it and the card or certificate has been redeemed for at least 90% of its face value, the holder under Massachusetts law can request to receive the balance in cash. If the gift card or certificate is of the kind which value can be added to it and the balance is $5.00 or less, the holder under Massachusetts law can request to receive the balance of $5.00 or less in cash.

TIPS

Bank issued cards are frequently governed under federal law while merchant gift cards are typically governed under a state law (and not necessarily the state in which you buy it).

• Before you purchase a gift card, read and understand the terms and conditions associated with it. Terms and conditions are not always found online, so you should check the actual instructions on the package in the store before purchasing the gift card.
• Most major retailers do not impose any fees or expiration dates, but smaller, regional or local businesses might impose such conditions. It is important to pay close attention, regardless of the location and size of the business, to any conditions associated with the gift card.
• Look specifically for the fees associated with the card. These could be dormancy fees, inactivity fees, or service fees. If there are any fees associated with the purchase or use of the card, consider avoiding that card altogether. Cards issued under Massachusetts law cannot incur certain types of fees, such as dormancy fees.
• Look specifically for mention of an expiration date. If it is before the regulated time period, report the business to the Consumer Financial Protection Bureau or the Attorney General for the state in which the card is issued. Under federal law, cards must be valid for at least five years. Cards issued under Massachusetts law must be valid for at least seven years.

Happy Holidays from the members of the Grafton Police Department

Normand A. Crepeau, Jr.

Chief of Police