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CUNA Regulatory Comment Call

August 16, 2010

Interim Final Rule that Extends the Effective Date for Certain Provisions of the CARD Act Gift Card Rules

EXECUTIVE SUMMARY

• The Federal Reserve Board (Fed) has issued an interim final rule that implements an amendment to the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) that was signed by President Obama on July 27, 2010. This amendment delays the August 22, 2010 effective date of certain provisions of the CARD Act rules that impose restrictions on the fees and expiration dates for gift certificates, store gift cards, and general-use prepaid cards.

• Specifically, for gift certificates, store gift cards, and general-use prepaid cards issued prior to April 1, 2010, the effective date for the disclosures required on or with the cards will be delayed until January 31, 2011. To qualify for this extended effective date, disclosures must be provided to consumers by way of toll-free telephone numbers, websites, signage in stores, and general advertising that inform consumers that there will be no dormancy, inactivity, or service fees and these cards, specifically the underlying funds, will not expire, regardless of what is printed on the card.

• These additional disclosures, which may be provided through a third party, such as a retailer or merchant, must also inform consumers that they are entitled to a free replacement card, along with the packaging and materials typically associated with the card. This information, except for the in-store signs and general advertising, must be available until January 31, 2013. The in-store signs and general advertising will not be required on or after January 31, 2011.

• The requirements in the current rule that the information be provided in retainable form will not apply to the additional disclosures described above in order to permit, for example, oral disclosures. The above-described disclosure requirements will also not apply to cards issued prior to April 1, 2010 if they are already in compliance with the CARD Act gift card rules.

• The legislative amendment and the interim final rule do not affect the August 22, 2010 effective date for the substantive fee restrictions that are required under these rules.

• Comments on the interim final rule are due thirty days after publication in the Federal Register, which should be within the next few days. Comments are due to CUNA by September 9, 2010. If commenting directly to the Fed, you must refer to Docket No. R-1377.

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Deputy General Counsel Mary Dunn at mdunn@cuna.com or Senior Assistant General Counsel Jeff Bloch at jbloch@cuna.com; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, 6th Floor, Washington, DC 20004. You may also contact us if you would like a copy of the interim final rule or you may access it here.

• Do you agree with the provisions of the interim final rule that amend the effective date for the CARD Act gift card rules? Are there other changes that should be made with regard to the effective date in order to fully implement the recent legislation?
  
  

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• Other comments?
  
  

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