Skip to main content

Search

Consumer Banking and Payments Law: 7.7.2.5 The Gift Card Agreement

The agreement that arises between the consumer and the provider or issuer of a gift card is also a source of contract law governing the card. There usually will be a gift card agreement found in terms printed on or provided with the card, in brochures published by the card issuer, or on the card issuer’s website. These terms often will favor the issuer,1063 but terms may also provide protections to the consumer. Ambiguous terms should be construed against the drafter.

Consumer Banking and Payments Law: 7.7.5.1 Regulation E

No person may sell or issue a gift certificate or gift card1084 with an expiration date, unless that person has established policies and procedures to provide consumers an opportunity to purchase a card with at least five years remaining on the card.1085 The card’s expiration date must be at least five years from when it was initially issued or last reloaded.1086

Consumer Banking and Payments Law: 7.7.5.2 State Law

A number of state laws require that expiration dates be a certain number of years from card issuance or place other restrictions on a card’s expiration date.1094 Other state statutes require that the card be redeemable at least under certain circumstances.1095 At a minimum, any expiration date should be clearly disclosed before purchase and should not be imposed on consumers after purchase.1096

Consumer Banking and Payments Law: 7.7.6 When the Card Does Not Function Properly

Consumers may be sold defective cards that do not operate at all or are not able to access the amount of value for which the consumer paid. In that situation, the issuer should be liable for breach of an express or implied warranty based either directly on UCC Article 2 or by analogy.1098 But Regulation E error resolution procedures do not apply because gift cards are not generally within the scope of the EFTA’s general provisions. It even may be difficult or impossible for the consumer to ascertain to whom a complaint should be made.

Consumer Banking and Payments Law: 7.7.7 Lost and Stolen Cards; Unauthorized Use

Because the EFTA’s general provisions do not apply to gift cards, the EFTA provides no protections for consumers when a gift card is lost, stolen, or used without authorization. Some cards may provide protection after they are registered. For example, MasterCard and VISA “zero liability” rules may offer protections for gift cards with those brands.1099

Consumer Banking and Payments Law: 7.7.8 Scams Using Gift Cards

Gift cards are a popular way for scammers to receive the victim’s money. Scammers urge the consumer to purchase the cards and then to give card numbers to the scammer. The scammer can then extract the card’s value, but the cards are virtually untraceable.

Consumer Banking and Payments Law: 7.7.9 State Escheat Laws

Every state has escheat, unclaimed property, or abandoned property laws, and one issue is whether, under these statutes, gift card issuers must transfer unused value to the state, which the state may then seek to return to the applicable consumers.1116 The Uniform Unclaimed Property Act adopted in fifteen states as their escheat statute specifically includes gift certificates.1117 Under the Act, the state official who administers the statute must advertise lists of “abandoned” property.

Consumer Banking and Payments Law: 4.4.5 Special Rules for Embezzlement by a Trustee or Other Fiduciary

The UCC has special rules when a fiduciary “embezzles money of the represented person by applying the proceeds of an instrument that belongs to the represented person to the personal use of the fiduciary.”156 If a person taking a check from the fiduciary has knowledge of the fiduciary status, and, notice or knowledge of the breach of the fiduciary duty, depending on the type of misdeed, the party taking the check may be liable for a claim to the instrument under U.C.C.

Consumer Banking and Payments Law: 4.5.3 Cash Deposits

The day on which a bank must make cash deposits available for withdrawal depends on whether or not the deposit was made in person. If made in person to an employee of the depository bank, the funds must be made available not later than the business day after the banking day on which the cash is deposited.206 Otherwise, the funds must be made available not later than the second business day after the banking day of the deposit.207

Consumer Banking and Payments Law: 4.5.4 Electronic Deposits

Regulation CC governs “electronic deposits,” defined as deposits by wire transfer or ACH credit transfer.208 Banks must make deposits by electronic payments available for withdrawal not later than the business day after the banking day on which the bank received the electronic payment.209 An electronic payment is deemed to have been received when the bank has received the payment in actual and finally collected funds, the information about the account, and the amount to be credited.

Consumer Banking and Payments Law: 4.5.5 General Issues Affecting Regulation CC’s Funds Availability Schedule

The time by which funds must be made available is determined by a mandatory availability schedule. Availability depends upon the type (i.e., cash, electronic, type of check) and manner (i.e., in person, by ATM) of the consumer’s deposit. Banks may make funds available sooner than is required by the schedule.212

The funds availability schedule does not affect a depositary bank’s right to: