Wednesday, February 24, 2010

Panel Discussion: Card ’09/Regulation E

Ky-Tran-Tong, Counsel, Division of Consumer & Community Affairs, Federal Reserve Board
Jon Ricci, General Counsel, Green Dot Corporation
Brad Fauss, Senior Vice President & General Counsel, Springbok Services
Deborah S. Thoren-Peden, Partner, Pilsbury
John Hagy, Chief Compliance Officer, Meta Payment Systems

Talbott began the regulation session by introducing the panelists and then giving a quick recap of the CARD ACT and how it calls for more consumer protection on credit cards and prepaid products.

What is Reg E and the impacts on gift cards?
Ky-Tran-Tong, Federal Reserve Board

Reg E makes it unlawful to sell or issue a gift card that is subject to an expiration date as well as establishing basic rights and principles for consumers. Certain protecting under Reg E might not make sense for gift cards.

What is the scope of this act? What products are included and excluded?
Jon Ricci, Green Dot Corporation

Cards that are defined in the act:
1. store gift cards
2. gift certificates
3. general use prepaid cards

The card act also extends beyond just plastic cards like virtual accounts, instruments that have barcodes, and contactless chips.

What is specifically meant by service fee in the act?
Brad Fauss, Springbok Services

The only fee that is excluded is the initial purchase fee. Brad thinks that Congress did not intend to include ATM fees, balance inquiry fees, and customer service fees in the ACT and it should be excluded as well.

When can the cards expire and what happens to the remaining funds?
Deborah S. Thoren-Peden, Pilsbury

The minimum time for expiration dates is 5 years from the date of purchase for general reloadable prepaid cards. Some states have certain laws that might not even allow prepaid cards to expire it all so it can vary at a state level.

What are some issues with the clear and conspicuous requirement for disclosure?
Ky-Tran-Tong, Federal Reserve Board

It is easy to understand and it is located where consumers can see it clearly. It does not necessarily have to be on the front of the card. Stickers are not recommended because stickers can be taken out. The amount of the fee and the has to be posted as well. It is also required to have expiration dates on the packaging.

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