December 16, 2019

consumer news

FEDERAL DEPOSIT INSURANCE CORPORATION

Gift cards can be a convenient present 

for the holidays and special occasions. 

While they seem simple, it is important 

that both the giver and the recipient read 

the details for each card to avoid any 

misunderstandings, and there might be 

additional policies set by the merchant 

or bank issuing the card. 

Federal Law Offers Protections

The Credit Card Accountability 

Responsibility and Disclosure (Credit 

CARD) Act provides several protections 

for consumers who purchase certain types 

of gift cards, including store and restaurant 

gift cards (also known as merchant or 

retail gift cards). These cards can only be 

redeemed at the stores and restaurants that 

sell them. Bank gift cards, which carry the 

logo of a payment card network (e.g., Visa, 

MasterCard), are also subject to Credit 

CARD Act protections and can be used 

wherever the brand is accepted. 

What You Should Know About 

Gift Cards

So you can enjoy 

giving and receiving

Under the law, a gift card cannot expire 

until at least five years from the date it 

was activated.

The law also places general limitations on 

fees. For instance, the card issuer cannot 

charge a dormancy or inactivity fee on a 

gift card unless there has been no activity 

for one year and the card clearly states its 

policy toward that fee. In addition, some 

states have separate laws that provide 

added protection in certain circumstances. 

To learn more about the laws protecting 

consumers who purchase gift cards, visit:

http://www.ncsl.org/research/financialservices-and-commerce/gift-cards-andcertificates-statutes-and-legis.aspx

https://www.ftc.gov/news-events/pressreleases/2010/11/ftc-has-gift-card-tipsholiday-buying

Beware of Scams

Scammers often use gift cards as a way 

to defraud people of their money because 

they’re just like cash – any misuse is 

hard to trace. Unlike credit cards, there 

typically isn’t any recourse for consumers 

when a gift card is stolen or used without 

authorization, so it is very hard to 

reverse the purchases or get a refund 

in these situations. 

Another common scam is someone who 

poses as an attorney for a family member 

and claims that the family member is 

in trouble with the law and in need of 

assistance. The scammer contacts you by 

phone or email, and asks you to purchase 

gift cards in specific amounts to pay 

them. These are all red flags to a scam, 

and once you purchase the gift cards, the 

PHOTO: GETTY IMAGES
scammer will tell you to provide the code 

numbers and PINs that are usually located 

on the back of cards, so that the scammer 

can redeem them.

Remember, no business or government 

agency will ask you to make payments 

with gift cards, so if you are contacted 

in this manner, it is most likely a scam. 

It’s also a good rule of thumb to never 

make a payment over the phone or by 

wiring money unless you can confirm 

that the request for payment is legitimate. 

Also, be on the lookout for gift card scams 

if you are selling items. Someone may 

contact you to purchase the item you are 

selling and tell you they will send a check 

for more than the purchase price and ask 

you to give them the difference in the form 

of a gift card, but once you try to deposit/

cash the check, you’ll find out it is fake. 

For more information on identifying 

and avoiding scams, visit:

https://www.consumer.ftc.gov/

blog/2018/10/scammers-demand-gift-cards

https://www.consumer.ftc.gov/articles/

paying-scammers-gift-cards

If you believe you’ve been the victim of 

a gift card scam, report the situation to 

your local police department. You may 

also want to notify the Federal Trade

Commission (FTC), which tracks scams 

and frauds. 

You might get back the money left on the 

card or a portion of it. Sometimes there is 

a fee when they provide a refund, but it’s 

still worth reporting. 

In addition, you should immediately report 

the scam to the merchant or company that 

issued the card and ask if they can refund 

your money. Most issuers have toll-free 

telephone numbers available online, so you 

can call to report a lost or stolen card. You 

might get back the money left on the card 

or a portion of it, and sometimes there is a 

fee when they provide a refund, but still 

worth reporting. You may need to provide 

the receipt and the card number, so be sure 

to keep a record of that information.

Tips When Buying Gift Cards

Avoid buying gift cards from unknown 

sites. The cards may be counterfeit or 

stolen, so be sure to buy gift cards from 

sources you know and trust. 

• If you are buying a card from a retailer,

check it before purchasing. Make sure

that the codes on the back of the card

haven’t been scratched off to show the

PIN number.

For more help or information, go to www.fdic.gov or 

call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). 

Please send your story ideas or comments to Consumer Affairs 

at ConsumerNews@fdic.gov

• Be sure to read the gift card’s fine print.

Know the terms and conditions. Is there

an expiration date? Are there fees to use

the card? Are there fees if the card is not

used for a certain period of time?

• If possible, register your gift card. This

may help protect you in case the card

is lost or stolen.

Now that you are better informed, be sure 

to share this information with the receiver 

of your gift, so they can be prepared too!

For more information on gift cards, visit 

the Consumer Financial Protection Bureau 

(CFPB) at https://www.consumerfinance.

gov/about-us/blog/giving-or-receivinggift-cards-know-the-terms-and-avoidsurprises/. 

Prepaid cards are also popular gifts, but 

the protections available are different 

than those described here for gift cards. 

For more information about prepaid 

cards, visit the CFPB at https://www.

consumerfinance.gov/prepaid-rule/

and see the FDIC Consumer News 

article titled “Is the Money on My 

Prepaid Card FDIC-Insured?” at 

https://www.fdic.gov/consumers/

consumer/news/september2019.pdf.