Hidden fees: Do gift cards take as much as they give?

According to the Federal Trade Commissions FTC Gift Card Message

There are two types of gift cards.

• Retail gift cards (e.g. Target, Walmart, Chilli’s, etc.) may have expiration dates or a fee for inactivity that sometimes is called a “dormancy fee”.
• Bank gift cards (like VISA, MasterCard, Discover, etc) can be used at any location accepting cards from their network, but you’ll probably end up paying more fees for activation, maintenance, and/or transactions on bank gift cards than on retail gift cards (e.g. Target, Walmart, Chilli’s, etc.)

The FTC suggests that you take the following measures to protect yourself and/or the gift card recipient:

• “Buy from sources you know and trust. Avoid buying gift cards from online auction sites, because the cards may be counterfeit or may have been obtained fraudulently.”
• “Read the fine print before you buy. If you don’t like the terms and conditions, buy elsewhere.”
• “Ask about expiration dates and fees when you’re buying a card. This information may appear on the card itself, on the accompanying sleeve or envelope, or on the issuer’s website. If you don’t see it, ask. If the information is separate from the gift card, give it to the recipient with the card to help protect the value of the card.”
• “Consider purchase fees: Must you pay a fee to buy the card? If you buy the card online or on the phone, is there a fee for shipping and handling? Does expedited delivery cost more?”
• “Consider fees that may be deducted from the card, including activation, maintenance or transaction fees. It might be embarrassing to give someone a $50 gift card and find out later that fees gobbled up most of the amount.”
• “Inspect the card before you buy it. Verify that none of the protective stickers have been removed, and make sure that the codes on the back of the card haven’t been scratched off to reveal a PIN number. Report tampered cards to the store selling the cards.”
• “Give the recipient the original receipt to verify the card’s purchase in case it is lost or stolen.”
• “Consider the financial condition of the business and whether it has filed for bankruptcy.”

For more information about gift cards and how to use them, visit the FTC’s gift card web page at
http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt010.shtm

Read about new Gift and Credit Card federal laws going into affect in this year (2010).  According to the FDIC, “Under the new law, gift cards and similar cards cannot expire within five years from the date they were activated unless the expiration date is clearly disclosed. The law also generally prohibits an inactivity fee on gift cards except in certain circumstances, such as if there has been no transaction for at least 12 months.“