Gift-card / stored-value compliance (CARD Act)

Description

The federal CARD Act of 2009 set the operating envelope for gift cards and stored-value products in the US. The headline rules are mostly settled and most product teams understand them. The operational work tends to live in the corners where the headline rules do not obviously apply but the statutory definition of stored value reaches anyway. The headline rules: a five-year minimum validity period from the date of issuance (or the most recent reload, whichever is later); a strict cap on inactivity fees, with no fee at all in the first 12 months of dormancy and at most one fee per month after that; mandatory prominent disclosure on the card itself and on the packaging of any fee schedule that applies; and a prohibition on dormancy fees that effectively erode the balance faster than the validity period extinguishes it. The CFPB's CARD Act regulations at 12 CFR 1005.20 operationalize the disclosure requirements, including the typography rules for fee disclosure that catch retailers more often than first-pass reads suggest. State laws frequently layer additional rules on top: California, New York, and others require longer-than-five-year validity periods; many states apply escheatment to unredeemed balances after a fixed dormancy window; New Jersey's Unclaimed Property Act has been an active enforcement surface for several years. The corners are where the actual product-classification questions live. Platform credits redeemable for goods or services from the issuer, in-game wallets that buy virtual items, refer-a-friend balances credited to the inviting user, and promotional credits that can be applied at checkout all sit somewhere on the stored-value spectrum, and the position on that spectrum depends on whether the credit is purchased with cash, whether it is transferable, whether it carries a cash-equivalent redemption path, and whether it interacts with the cash economy at all. A platform credit that is redeemable for goods or services from the issuer but not transferable to other users may still count as a stored-value product under the statutory definition; the analysis is fact-specific enough that the cheapest pattern is documented classification at product-launch time with counsel sign-off, rather than the retrofitted analysis after the product has accumulated a substantial outstanding-credit balance. The downstream impact of misclassification is not just CARD Act exposure: a credit reclassified as stored value also triggers state escheatment obligations on unredeemed balances, which can land as a multi-year retroactive remittance plus penalties when discovered. The under-noticed adjacent rule is CARD Act Section 301, which bars the issuance of credit cards to consumers under 21 absent a co-signer or independent ability to pay; the rule catches youth-targeted financial products (teen banking apps, family-finance apps offering credit-adjacent features) in unexpected places. The compliance burden there is age verification at the credit-issuance point plus documentation of either the co-signer relationship or the ability-to-pay determination. The cheapest operational pattern is a classification memo at product launch, a fee-disclosure template that the marketing surface inherits automatically, and an inactivity-fee guardrail in the stored-value system that refuses to debit during the first 12 months regardless of what the configuration table says; the third piece catches the cases where a future product change accidentally re-enables the dormancy fee for new issuances.

Applicability

Applies when: markets include US.

How predicates are evaluated

Required by (1 regulation)

• CARD Act

  Credit Card Accountability Responsibility and Disclosure Act of 2009: 5-year validity minimum, inactivity fee restrictions, fee disclosure on packaging, underage credit issuance restrictions, marketplace gift-card analysis.

  15 U.S.C. §§ 1637, 1666i-1, 1666i-2

Fulfilled by (6)

• tango-card · full · low effort · $$
  Tango (Rewards Genius) handles CARD Act expiry / fee compliance for distributed gift-card programs.
• tremendous · full · low effort · $$
  Tremendous gift-card API enforces CARD Act expiry + inactivity-fee rules out of the box.
• blackhawk-network · full · medium effort · $$$
  Blackhawk's distribution + redemption infrastructure handles state-by-state CARD Act + complementary state laws.
• givex · full · medium effort · $$
  Givex stored-value platform with regional fee / expiry controls.
• square-gift-cards · full · low effort · $
  Square Gift Cards built-in CARD Act compliance for SMB merchants.
• In-house build · high effort
  In-house stored-value systems need expiry-clock service + inactivity-fee guardrail + state-law overlay (some states require longer than 5 years).

Magist does not accept payment from vendors. Methodology.

Evidence formats

• gift-card terms of service citing CARD Act provisions
• fee-disclosure copy on packaging / digital purchase flow
• stored-value classification memo for platform credits / virtual currency
• underage-issuance flow documentation (age check + ability-to-pay verification)
• annual audit log of expiry / fee compliance