Most Americans have either purchased or received a gift card or certificate. Business owners who issue, sell or redeem such cards should prepare to comply with the new federal law and, when they become available, the final regulations which will dictate disclosures, restrict fees which may be charged in connection with such products and programs and determine the scope of the cards and programs subject to such regulations.
The proposed regulations generally expand the need for disclosures, limit fees associated with the cards, and expand the types of gift programs governed. The proposed regulations were released November 16, 2009 and the comment period will close in mid-January 2010. Final regulations will be released sometime thereafter and go into effect by August 2010.
We recommend that businesses potentially affected by the new law review the final regulations when they are released and remind covered businesses that, although many states already have gift card laws governing fees, gift expirations, and disclosures, they will become subject to the stricter and in some cases broader provisions of the federal and individual state regulations. The proposed regulations leave open the question of whether gift cards or certificates issued prior to August 22, 2010 or already in circulation by that date will be grandfathered in under the new regulations.
We will be monitoring developments with the gift card and gift certificate regulations and will send you an update soon after the final regulations are issued.
This Client Alert has been prepared by Lewis and Roca LLP for informational purposes only and is not legal advice. Readers should seek professional legal advice on matters involving these issues.
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