WASHINGTON (CN) – Gift cards should not expire before 5 years and fees should apply only after a year of inactivity, the Federal Reserve said Monday in a new proposal that could affect 95 percent of the population.
Under the new rules, gift card issuers would only be able to charge service or inactivity fees after a year of inactivity on the card, and the card would not be able to expire until 5 years after it was issued.
Once card issuers begin to charge fees, they may only do so once per month. The measure is expected to nearly eradicate transaction-based fees or balance inquiry fees.
Issuers would also provide clear disclosure of any fees.
More than 95 percent of Americans have bought or received gift cards, the Fed said.
The announcement comes as Congress considers reassigning the agency’s oversight of credit cards and mortgages as the Fed and the Obama administration pursue far-reaching financial reforms.
The Fed was heavily criticized for not acting quickly and aggressively enough in tackling what many considered abusive lending practices.
The new regulations, which are set to take effect in August, would amend the Credit Card Accountability Responsibility and Disclosure Act of 2009.
The agency is seeking commentary on the proposal over the next 30 days.