Compliance Blog

Posted by Anthony Demangone

For the foregoing reasons, § 205.20(c)(3) is adopted as proposed, with some revisions. One industry commenter requested that the Board clarify in the final rule that an issuer may modify the terms of the certificate or card after purchase, so long as the modifications are disclosed to the consumer. The Board believes permitting the modification of fees and terms and conditions of expiration for certificates or cards would be problematic because many certificates or cards are issued without obtaining the name or other information about the consumer. Moreover, the certificate or card may be given to another consumer after purchase. In such cases, it would be difficult to inform consumers that fees and terms and conditions of expiration for a certificate or card have changed, because the issuer would not have the consumer’s contact information. Moreover, permitting an issuer to change the fees and terms and conditions of expiration for a certificate or card after purchase would undermine the purpose of disclosing those fees and terms of expiration prior to purchase. Consumers would be unable to rely on the fees and terms and conditions of expiration disclosed on different certificates or cards when comparing products. Therefore, § 205.20(c)(3) provides that fees and terms and conditions of expiration that are required to be disclosed prior to purchase may not be changed after purchase. The Board has also modified § 205.20(c)(3) to clarify that an issuer or vendor, as referenced in EFTA Section 915(b)(3)(B), is a person that issues or sells a certificate or card to a consumer. (Emphasis added.)  

So, if your credit union issues gift cards, you better get comfortable with those fees.  If you change your fee structure regarding gift cards, the changes will only affect new cards.  With that in mind, you'd have to find a way to track fee amounts for the old cards so that you don't charge a new fee to an old gift card.