New Compliance Burdens for Gift Cards and Consumer Promotions: The CARD Act Creates New Requirements and New Liabilities

Nearly every company that sells a gift card or provides promotional benefits to consumers will – as of August 22, 2010 – need to comply with the CARD Act. But what is the CARD Act and how will it affect your loyalty programs and your gift cards?

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) sounds like one more consumer credit regulation, but almost any business that uses modern technology to interface with consumers needs to pay attention. In fact, the CARD Act covers gift cards, gift certificates and, to the surprise of many, offers and rewards from promotional programs (e.g., certain online coupons and sweepstakes prizes) and/or loyalty programs (e.g., programs awarding customers “$10 off” coupons or cards after spending a certain amount of money at a particular store). The CARD Act imposes disclosure requirements on offers and rewards from promotional and loyalty programs, and implements both substantive requirements and disclosure requirements for gift cards, gift certificates and the like.

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