Promotional Cards and the CARD Act

Thought you might be interested in reading an article on the subject of Loyalty, Award, and Promotional Gift Cards from the Philly Fed that I found interesting.



It reads in part, “Loyalty, award, and promotional gift cards are typically not funded by the consumer but by the entity sponsoring the card program. To qualify for the exclusion, the card must meet three requirements. It must 1) be issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in connection with a loyalty, award, or promotional program; 2) be redeemable at one or more merchants for goods or services, or it can be used at an automated teller machine; and 3) make certain disclosures. To facilitate compliance, comment 20(a)(4)-1 provides seven illustrative (but not exhaustive) examples.

While loyalty, award, or promotional gift cards are not subject to the Credit CARD Act’s substantive restrictions on fees and expiration dates, certain disclosure requirements still apply. In particular, the front of the card must disclose the expiration date and state that it is issued for loyalty, award, or promotional purposes.

Printing ‘Reward’ or ‘Promotional’ on the front of the card satisfies this requirement. Issuers must also disclose a toll-free number anywhere on the card and (if applicable) a website address that a consumer can use to obtain fee information. Finally, any fees and the conditions under which they may be imposed must be disclosed on or with the card, code, or device.”