Consumers have a variety of personal finance issues to be wary of during the holidays, from an elevated risk of identity theft to a temptation to rack up debts by overspending on credit cards.
However, one consumer organization is also reminding people to be wary of the terms and conditions that may be attached to the gift cards they give or receive this season. In fact, the Federal Reserve is currently weighing proposed reforms on gift card issues as part of a broader requirement laid out in the Credit CARD Act.
“Congress passed limits on gift card fees earlier this year and now it’s up to the Fed to make sure consumers are fully protected. The Fed should impose reasonable limits on fees so consumers stand a better chance of enjoying the full value of the gifts they receive,” said Michelle Jun of the nonprofit group Consumers Union.
The group cited research from Consumer Reports which found that about 25 percent of consumers received a gift card last year which they still have not used, and that 11 percent of these consumers still had four such cards.
Consumers Union is calling on the Federal Reserve to better serve the public by limiting for a 12-month period the inactivity fees that gift card providers can impose. Other proposals include capping the fees that can be placed on low-value cards, while also making sure that the cards cannot expire less than five years from their date of purchase.
Since some gift cards can be reloaded and used in a way similar to debit cards, the group is also seeking protections for consumers who have their cards stolen. The gift proposals are especially relevant this year when many people are reacting to the recession by emphasizing practicality in their gift-giving.
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The holiday shopping season presents various personal finance pitfalls.
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