WASHINGTON The Office of the Comptroller
of the Currency today issued guidance on disclosure and marketing issues
associated with gift cards. The guidance
focuses on the need for national banks that issue gift cards to do so in a
manner in which both purchasers and recipients are fully informed of the
products terms and conditions.
The gift card market is
growing rapidly, and the terms and conditions of various cards can vary
widely, said Comptroller of the Currency John C. Dugan. Its very important
that national banks engaged in this business adopt robust disclosure policies
so that consumers understand what they are getting when they buy or receive a
gift card.
Gift cards present special
challenges because disclosures to a purchaser may not be adequate for a gift
card recipient. The OCC expects national
banks that issue gift cards not only to inform purchasers about material terms
and conditions, but to take appropriate steps so that critical information is
likely to be available to recipients as well.
Basic information that is most
essential to a gift card recipients decisions about when and how to use the
card should be provided on the gift card itself, or on a sticker or tape
affixed to the gift card. Disclosures
should generally tell consumers:
- The expiration date of the card
(which should appear on the front of the card);
- The amount or the existence of any
monthly maintenance, dormancy, usage or similar fees;
- How to obtain additional
information about their cards or other customer service (for example, by providing
a toll free number or website address).
In addition, since the user of
the gift card is generally not the person who purchased the product, issuers
should provide information for card recipients and encourage purchasers to pass
it on. These disclosures could be
carried in promotional packaging or inserted into an accompanying sleeve and
include such information as the name of the issuing bank, any fees that may
apply and what to do if the card is lost or stolen.
The OCCs new guidance also
advises national banks to avoid practices that could be misleading to
consumers. For example, issuers should
not advertise a gift card with no expiration date if monthly service or
maintenance fees, dormancy fees or similar charges can consume the card balance. Similarly, if fees may consume the card
balance before the stated expiration date, disclosures related to that
expiration date should explain that possibility. Issuers should also avoid describing gift
cards as if they are gift certificates or other payment instruments more
familiar to consumers, or as products that carry federal deposit insurance.
The full text of the guidance
is available on the news release page of the OCCs web site.
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The Office
of the Comptroller of the Currency was created by Congress to charter national
banks, to oversee a nationwide system of banking institutions, and to assure
that national banks are safe and sound, competitive and profitable, and capable
of serving the banking needs of their customers in the best possible
manner. OCC press releases and other
information are available at http://www.occ.gov. To receive OCC press releases and issuances
by email, subscribe at http://www.occ.gov/listserv.htm.