Comments are in on the Federal Reserve Gift Card Rules

scratching-my-headIn November, the Federal Reserve published their proposed rules for prepaid cards. The Federal Reserve set a shortened comment period, which ended yesterday. We’ve reviewed all of the publicly available comments and, with the exception of several comments (which we’ll discuss separately), our reaction is …. huh?

The majority of comments on the proposed Fed rules were submitted by concerned citizens. Several more detailed comments were submitted by the Network Branded Prepaid Card Association, the Attorney General of the State of Connecticut, and a group consisting of the Consumers Union, Consumer Action, CFA, and the National Consumer Law Center. Each of these comments were well-presented and argued, and we’ll discuss them in a separate news item.

The subject of this post are the remaining comments, which consisted of hand, typewritten (on a real typewriter with errors corrected by white-out) or emailed comments.

These comments are a fascinating read, and we’re not sure if they are representative of consumer opinion as a whole, or the opinion of that segment of consumers who read the Federal Register and who take the time to voice their opinion (even though they may not have read the proposed rules) against fees of any type.

We think the comments are representative of the latter segment.

A number of the commenters admit that they don’t know what the rules are. But almost all of the individual commenters (other than a group of employees from The Bancorp Bank) are clearly against fees of any type.

Here’s a quote from one commenter that sums up many of the opinions of individuals:

I have no idea what your proposed rules on gift cards are, but you should definitely follow the KISS rule. The rule(s) should simply say: no fees or charges at any time and no expiration date.

Huh?

Look, we know that consumers hate fees (heck, we hate them as well, we would love it if there were no fees or charges). But we need to remember that gift cards are a convenience and a service provided by merchants. Consumers love using them, and we love giving them.

But the convenience comes at a cost. The cost to set up a gift card program. The cost to design, print, personalize, issue and deliver the plastic. The cost to switch, process, clear and settle transactions. The cost to deal with fraud and chargebacks. Etc., etc., etc.

These costs need to be recouped somewhere, and the only reasonable place to recoup them is from the consumers who choose to use the convenience of these cards.

We’ll dig into some of the more comprehensive comments shortly in a separate news item.

If you are interested in reading some of the comments yourself, check them out here.

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