The Regulation E gift card rules are the US federal requirements that limit expiration dates and fees on gift certificates, store gift cards and general-use prepaid cards sold to consumers. They are set out in section 1005.20 of Regulation E (12 CFR 1005.20) and implement gift card provisions that the Credit Card Accountability Responsibility and Disclosure Act of 2009, known as the CARD Act, added to the Electronic Fund Transfer Act. In broad terms, the funds on a covered card must last at least five years, and inactivity fees are allowed only after a year of non-use.
The rules apply only in the United States and sit alongside state gift card laws, which may be stricter. They are distinct from the rest of Regulation E, which governs electronic fund transfers such as debit card payments and error resolution, and from the separate prepaid account rules for reloadable cards that are not marketed as gifts.
Regulation E gift card rules in plain terms
Think of a concert ticket that says the show date on the front. With a gift card, people used to find a similar date they had not noticed, after which the money vanished, or small monthly charges that ate into the balance while the card sat in a wallet. The federal rules were written to stop those surprises.
Today, a gift card bought in a US shop has to keep its money for at least five years. The seller cannot start charging for non-use until a full year has passed, can charge only once a month after that, and has to print those terms on the card. If the plastic itself expires before the money does, the buyer can ask for a replacement card free of charge.
Background and legal basis
By the late 2000s, bank-issued open-loop gift cards and retailers' closed-loop cards were a large consumer market, and complaints about short expiry dates and monthly maintenance fees were common. Title IV of the CARD Act, signed on 22 May 2009 and otherwise focused on the credit card market, added section 915 to the Electronic Fund Transfer Act. The Federal Reserve Board issued the implementing rule, published on 1 April 2010, and it applies to cards sold on or after 22 August 2010. A 2010 amendment let issuers keep selling cards printed before 1 April 2010 until 31 January 2011 if they honoured the new terms. Rulemaking authority passed to the Consumer Financial Protection Bureau under the Dodd-Frank Act, and the rule was republished as 12 CFR 1005.20.
Key requirements
- Scope. The rule covers gift certificates, store gift cards and general-use prepaid gift cards sold or issued to consumers primarily for personal, family or household use.
- Fees. A dormancy fee, inactivity fee or service fee may be charged only if there has been no activity for 12 months, only one such fee is imposed in a calendar month, and the fee is disclosed on the card and before purchase.
- Expiration. The funds may not expire earlier than five years after the card was issued or last loaded. A card's own expiry date may be earlier, but the card must say that the funds do not expire with it, and a replacement must be provided free of charge.
- Disclosures. Fee and expiry terms must appear clearly on the card, with a toll-free number and, if one exists, a website for fee information and replacements.
The rule excludes cards usable only for telephone services, reloadable cards not marketed or labelled as gift cards, loyalty, award or promotional cards that meet disclosure conditions, cards not marketed to the general public, paper-only certificates, and cards redeemable only for admission to particular events or venues.
Compliance considerations
A card issuer and its program manager must design card packaging, terms and processor settings so that fees and expiry dates follow the rule, and must decide whether a product is a gift card or a general-purpose reloadable card. That choice matters: reloadable products outside the gift card definition fall under the CFPB's Prepaid Accounts Rule, effective 1 April 2019, with its own disclosure and error-resolution requirements. Gift cards are also prepaid access for anti-money laundering purposes; under FinCEN's 2011 rule, closed-loop products that cannot load more than $2,000 per device in a day are generally excluded from provider of prepaid access obligations under the Bank Secrecy Act. State unclaimed property laws apply separately to unused balances.
Enforcement
The CFPB, the federal banking agencies for the banks they supervise, and the Federal Trade Commission for many non-bank sellers can enforce the rules. Consumers can also sue under the civil liability section of the Electronic Fund Transfer Act, which provides for actual damages, statutory damages of $100 to $1,000 in individual cases, and attorney's fees; class action damages are capped at the lesser of $500,000 or 1% of the defendant's net worth.
Criticism
Consumer groups welcomed the limits but noted that a five-year floor still allows funds to expire, and that most lost value now comes from breakage rather than fees. Industry groups pointed to the cost of reissuing stock and redesigning cards in 2010. More recently, regulators have focused on fraud: the rule does not address the gift card scams in which criminals pressure victims to buy cards and read out the numbers.