CUNA Comment Letter -- Interim Final Rule Extending the Effective Date for Certain Gift Card Provisions of the CARD Act

September 15, 2010

Ms. Jennifer J. Johnson
Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551

RE: Docket No. R-1377 – Interim Final Rule Extending the Effective Date for Certain Gift Card Provisions of the CARD Act

Dear Ms. Johnson:

The Credit Union National Association (CUNA) appreciates the opportunity to submit comments to the Federal Reserve Board (Board) in response to the interim final rule that implements an amendment to the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) that was signed by President Obama on July 27, 2010. This amendment delays the August 22, 2010 effective date of certain provisions of the CARD Act rules that impose restrictions on the fees and expiration dates for gift certificates, store gift cards, and general-use prepaid cards, as long as certain disclosure requirements are satisfied. By way of background, CUNA is the largest credit union advocacy organization in this country, representing approximately 90% of our nation’s 7,700 state and federal credit unions, which serve 93 million members.

Summary of CUNA’s Comments

Discussion

The interim final rule implements the recent legislation signed by President Obama that delays the effective date of certain provisions of the CARD Act. Specifically, for gift certificates, store gift cards, and general-use prepaid cards issued prior to April 1, 2010, the effective date for the disclosures required on or with the cards will be delayed from August 22, 2010 until January 31, 2011. To qualify for this extended effective date, disclosures must be provided to consumers by way of toll-free telephone numbers, websites, signage in stores, and general advertising that inform consumers that there will be no dormancy, inactivity, or service fees and that these cards, specifically the underlying funds, will not expire, regardless of what is printed on the card.

These additional disclosures, which may be provided through a third party, such as a retailer or merchant, must also inform consumers that they are entitled to a free replacement card. This information, except for the in-store signs and general advertising, must be available until January 31, 2013. The in-store signs and general advertising will not be required on or after January 31, 2011.

CUNA supports the flexibility in the interim final rule with regard to this extended effective date, which for the most part mirrors the legislation that was signed by President Obama on July 27, 2010. We also appreciate the additional clarifications in the rule that will help facilitate compliance with these provisions. These include the clarification that the qualifying disclosures described above are not subject to the requirement that they be in retainable form in order to permit, for example, oral disclosures and that these qualifying disclosure requirements will not apply to cards issued prior to April 1, 2010 if they are already in compliance with the CARD Act gift card rules.

Thank you for the opportunity to comment in response to the interim final rule that will extend certain gift card provisions of the CARD Act. If you have questions about our comments, please contact Senior Vice President and Deputy General Counsel Mary Dunn or me at (202) 638-5777.

Sincerely,

Jeffrey P. Bloch
Senior Assistant General Counsel