New Hampshire Attorney General Says To Beware of Gift Card Fees

December 20, 2007 -- New Hampshire Attorney General Kelly A. Ayotte issued a warning today to New Hampshire consumers to be cautious when purchasing gift cards. New Hampshire’s Consumer Protection Act states that gift certificates may not expire, and that service charges, dormancy fees, or other administrative charges that reduce the value of the gift certificate are forbidden.

Some issuers of gift cards have avoided New Hampshire’s law by selling cards issued by national banks. One mall manager operating in New Hampshire, for example, sells gift cards that charge a $2.50 monthly administrative fee to the card beginning 12 months following the issue date. The same card has an expiration date, and consumers who wish to have a card reissued after the expiration date will be charged a $15.00 reissue fee. Replacement of lost or stolen cards will result in a $5.00 charge. Consumers who attempt to use their gift card after fees have been deducted have been surprised to learn that their gift card is worthless. A recent federal court decision ruled that these fees were allowed for cards issued by a national bank because federal law, not New Hampshire law, applied to the cards. The Attorney General has asked the United States Supreme Court to review that decision.

“As you can see, it does not take long for the gift card to become functionally worthless,” Attorney General Ayotte said. “Keep in mind that even though the consumer paid $25.00 for the gift card, if the value of that card is reduced by $2.50 each month, after ten months of fees the card no longer has any value.”

Attorney General Ayotte went on to point out that there are a variety of gift cards on the market, most of which comply with the Consumer Protection Act. “Our office recommends that consumers be sure to read the terms and conditions before purchasing any gift card and that those who receive a card determine if they need to use it promptly or if they can hold it for a while without losing value. Because gift cards are a popular gift item, it is especially important for consumers to be aware of these issues.”

Cards that are not issued by a bank are still subject to New Hampshire’s Consumer Protection Act, and cannot have fees that reduce the value of the card, nor can they expire. Attorney General Ayotte warns all consumers to be cautious anytime they purchase a gift card. Consumers should read the terms and conditions before purchasing a gift card, and ask if there are fees that reduce the value of the card, or if there are expiration dates. If consumers have questions about gift cards, they should call the Consumer Protection Hotline at 1-888-468-4454. Consumers can also file complaints with the Attorney General’s Office online at http://www.egov.nh.gov/consumercomplaint.

Source: New Hampshire Attorney General