I. INTRODUCTION
The Office of the Comptroller of the Currency issued new guidance on disclosure and marketing issues associated with gift cards - focusing on “the need for national banks that issue gift cards to do so in a manner in which both purchasers and recipients are fully informed of the product’s terms and conditions.” While the guidance is not applicable to state chartered financial institutions, consideration may be given to implementing some of the marketing and disclosure recommendations.
Gift cards present special challenges because disclosures to a purchaser may not be adequate for a gift card recipient. The OCC expects national banks that issue gift cards not only to inform purchasers about material terms and conditions, but to take appropriate steps so that critical information is likely to be available to recipients as well.
II. GIFT CARD DISCLOSURES
A. Disclosures on Gift Cards
Basic information that is most essential to a gift card recipient's decisions about when and how to use the card should be provided on the gift card itself, or on a sticker or tape affixed to the gift card. Disclosures should generally tell consumers:
III. DISCLOSURES ACCOMPANYING GIFT CARDS
In addition, since the user of the gift card is generally not the person who purchased the product, issuers should provide information for card recipients and encourage purchasers to pass it on. These disclosures could be carried in promotional packaging or inserted into an accompanying sleeve and include such information as the name of the issuing bank, any fees that may apply and what to do if the card is lost or stolen. Depending on the terms of the gift card product, this information may include:
IV. PRACTICES TO AVOID
The Guidance advises national banks to avoid practices that could be misleading to consumers regarding the terms, conditions, or limitations of the bank gift card product they are offering. For example, issuers should not advertise a gift card as having “no expiration date” if monthly service or maintenance fees, dormancy fees, or similar charges can consume the card balance and thereby have the same practical effect as an expiration date. Similarly, if such fees may consume the card balance before the stated expiration date for the card arrives, disclosures relating to that expiration date (other than the disclosure on the front of the card) should explain that possibility. Issuers also should generally avoid describing gift card products in terms suggesting that they are similar to gift certificates or other payment instruments with which consumers may be more familiar, or as products that carry federal deposit insurance when such insurance does not apply.