New Maryland law doesn’t end expiration, fees for all gift cards
(This article was originally published in The Daily Record, Baltimore, MD, another Dolan Media publication.)
A new Maryland law restricting fees and expiration dates on some gift cards will take effect this weekend, but not all gift cards are entirely free of fees.
The law, passed by the Maryland General Assembly in 2005, applies to gift cards issued by retailers. Those issued by banks and malls – the fastest growing segment of the gift-card industry – will be exempt from the law.
I think it’s important that consumers understand the law because they will most likely hear a lot about the restrictions of fees and expiration dates over the next few days, said Tom Saquella, president of the Maryland Retailers Association. There will still be substantial fees connected with the gift cards issued by banks, so consumers need to be aware of this.
Bank-issued gift cards are typically those issued by large credit card companies, including American Express, Discover, MasterCard and Visa. This type of gift card is usually sold by banks and malls and accepted in multiple locations, much like credit cards.
Many individual retailers have already dropped fees and expiration dates because of growing customer dissatisfaction, he said.
This new law will not have a great impact on shoppers using retail gift cards, Saquella said.
As the popularity of gift cards grew every year, so did the outrage of customers unaware of the many terms and conditions attached. Some fees decreased the cards’ balance rapidly, and expiration dates made the cards worthless if they weren’t used in time.
I think when retailers started issuing gift cards five or six years ago, they did not know how things would work, so they placed fees and expirations dates on them, Saquella said.
A report issued last year by the Montgomery County Division of Consumer Affairs emphasizes that bank cards have a larger variety of fees.
The seemingly attractive features of bank cards come at the price of a slew of fees that can make them less attractive than retail cards, according to the report.
Saquella added: Consumers really need to read the disclosures required by the new law because they can still be charged fees.
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