In 2009 President Obama signed into legislation the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Card Act). The final phase went into effect Sunday, August 22, 2010.
While the stipulations of this act can protect you personally, this Act may impact your business in terms of time and costs. For business owners, the CARD Act covers gift cards, gift certificates, loyalty programs and rewards from promotional programs.
The biggest impact this has on therapists is that any gift certificate you sell that includes a dollar amount must clearly include an expiration date of no less than five years (or no expiration date at all).
As far as I can decipher, the exemption to this rule is that if the certificate is not issued in a specific dollar amount:
- Redeemable for a specific good or service (e.g., massage, bottle of essential oil), or
- Redeemable for a certain percentage (e.g. 15%) off the purchase.
Technically, this means as far as the Federal government is concerned, you can put an expiration date on a gift certificate if it is good for a service (e.g., one massage), and you don’t state the dollar value of the massage on the certificate. It also appears that you can still put a less-than-five-year expiration date on gift certificates that you give as promotions and to charity events, providing no money was exchanged for those certificates. Still, you might consider following these guidelines as consumers probably won’t be aware of the exceptions.
Loyalty Programs and Promotional Programs
Many companies offer coupons that are good for a limited time and you can still do so in most instances, as long as the consumer didn’t pay for the coupon. Some practitioners offer loyalty programs. If there are no fees involved, the 5-year minimum expiration term is not required. If you have a loyalty program, these are the main disclosure items you need to include:
1. Accurately label the front of the offer with a title, such as “Loyalty Program,” “Reward,” or “Promotion.”
2. Post the expiration date (if there is one) on the front.
3. Print the amount and conditions of fees (if there are any).
4. Print your telephone number and website if there are any fees associated with the offer.
Gift cards used to be a marketing tool reserved for large corporations, but many smaller businesses now utilize this marketing strategy. If you do, the new rules state that you can not impose fees unless no activity
has been made on the card for one (1) year. That statement, as well as the potential monthly dormancy/service fees, expiration date, and toll-free contact number must be clearly printed on the card.
What to Do
Keep in mind that these are the minimum Federal standards. Your state might impose more stringent rules. This new law is complicated and the exemptions are not straightforward. You needn’t worry if you are fine with the five year minimum expiration date. I recommend you consult an attorney if you offer gift certificates, loyalty programs or gift cards and you have concerns about their exemption status.
Originally published in WIBB (Massage Today‘s Women In Business Blog).