Consumer Financial Protection Bureau Rules State Laws are Superseded by Federal Law on Gift Cards

In April 2013, the Consumer Financial Protection Bureau (CFPB) ruled that unclaimed property laws in Maine and Tennessee that deem gift cards as abandoned property if not used within a certain period are preempted by federal law. Under the Electronic Fund Transfer Act and the CFPB’s Regulation E, the CFPB is permitted to “make a preemption determination” as to whether the rules conflict with state laws pertaining to the “expiration dates of gift certificates, store gift cards or general-use prepaid cards.” Federal law prohibits the sale of a gift card that expires sooner than five years after the date when the card was loaded. However, unclaimed property laws in Maine and Tennessee consider some gift cards to be abandoned property as early as two years from the date of purchase. “Commenters unanimously agreed that a state law that would force consumers to retrieve their unused gift cards’ value from the state, rather than from the issuers, would be less protective than federal law” the CFPB said. (Bureau of Consumer Financial Protection, Docket No. CFPB-2012-0036)

Posted on May 23, 2013