Category: Payments

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Tis the Gift Card Giving Season

gift-cardIn the past, every holiday season I would be bombarded with question after question about gift cards from consumers and reporters.  It seems most fitting that I continue to provide a quick run-down on gift cards and the rules that pertain to them, as gift cards continue to be a much desired and often given gift, with an estimated 85% of Americans exchanging them and over $110B spent on them according to the CEB TowerGroup’s 2012 assessment.

Whether you are on the giving, receiving, issuing, vending, or marketing side of gift cards (including plastic gift cards, e-cards, codes), it’s helpful to know that generally cards may all look like “gift cards” but laws certainly do not categorize treat them all as such.

Here’s the quick rundown:

Bank issued/Open Loop (Require compliance under Section 401 of the Credit CARD Act)

Store-issued/Closed Loop (Require compliance under Section 401 of the Credit CARD Act, relevant state gift card and escheat laws)

These laws restrict fees and expiration dates.  The Credit CARD Act gift card provisions also contain disclosure requirements.  Additionally, a number of states have gift card laws with more stringent fee and expiration date limits as well as have other laws on the books that require unused gift card funds escheat to the state.

Exceptions to Gift Card Laws:

  • Loyalty, reward, promotional cards (e.g. cards provided by retailers for spending certain amounts of money like the current offer at Barnes and Nobles or cards redeemed with credit or debit card reward points)

  • Prepaid calling cards

  • Cards NOT labeled or marketed as a gift card or gift certificate (e.g. General Purpose Reloadable Cards like Green Dot)-both issuers and retailers must be careful with how these cards are marketed and displayed

  • Cards not available to the public (card with funds from returned items)

  • Cards only in paper form (think old school paper gift certificates)

  • Cards only redeemable for admission to events/venues

This blog is for general information and educational purposes, not to provide legal advice. If you need legal advice, please consult with a qualified attorney.   

 

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The TCPA and Payments?

text_messagingThe new rules to the TCPA (Telephone Consumer Protection Act) go into effect today.  Generally speaking, consumers should be overjoyed that their dinners will likely go uninterrupted by an automated call from a telemarketer, creditor or debt collector (provided that they did not provide express consent to have them make the call in the first place).  But in the world full of mobile phones and text messaging, entities who have been auto generating offers and rewards need to take extra caution.

These new rules have been a hot topic in the legal world since the FCC issued them last year.  Legal news and blogs have been all over the issue for months.  Two key changes include the requirement of express consent and the end of the established relationship business exception.

Since I focus largely on payments and privacy, it seems appropriate to take a look at these significant changes to the TCPA, as they relate to merchants, creditors and debt collectors.

In the money and payments chain, merchants, creditors and debt collectors will also need to take extra caution and provide “clear and conspicuous disclosures” when obtaining “express consent” from their applicants and customers.  They should make sure they have documented proof of this consent in the event that they are met with future allegations of TCPA violations, as there will likely be plenty.  The cost for violation can be very high, starting from $500 up to $1500 per call.  Just ask Papa John’s who recently had to fork over $16.5M when its affiliates had a marketer send out unwanted text messages for their pizzas.

 

This blog is for general information and educational purposes, not to provide legal advice. If you need legal advice, please consult with a qualified attorney.  

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Payroll Cards vs. GPRs

plastic cardsPayroll cards received a lot of press over the summer with the lawsuit filed against a McDonald’s franchisee for giving its employees their pay on this type of plastic payment card.  The focus has been on the fees, in which case a recent blog by Jennifer Rusie of Ogletree Deakins, lays out what employers need to consider when thinking about or using payroll cards to pay their employees.

Apart from the various state labor laws which dictate whether or not an employer can provide pay using payroll cards and thereby warning employers not to violate these laws by pushing payroll cards, there is another view on payroll cards that bears discussion and may put even more control back in the hands of the employees.  GPRs, or general purpose reloadable prepaid cards, are currently under review by the CFPB and will likely extend those same Reg E payroll requirements to GPRs soon–which means in the eyes of Reg E, payroll and GPRs will look the same.

But, will this be the case for the user, in this case the employee?  What will be the ripple effect to the payroll card industry?  It seems that GPRs are far more adaptable and usable for consumers , whether unbanked, underbanked, fully banked, than payroll cards today.  A GPR holder is able to arrange to have not only their paycheck, but also other monies, including government issued benefits (if federal, provided the card meets DOT requirements) into the account.  These cards also allow other checks to be deposited, in some cases, offer remote deposit capture.  Basically, GPR card accounts offer the same functions as a checking account, and many are going beyond this with the adoption of convenient technologies.  Payroll cards, at least from my most recent informal survey, do not offer the same ability to deposit monies from sources apart from the employer, and may be limited to use only with an existing employer.

With these considerations, it seems as though the CFPB’s recent bulletin warning against the exclusive use of payroll cards may be rendered moot, or at least less significant, as more consumers (when Reg E is extended to GPRs) will see the value in choosing their own prepaid card to obtain their pay.  

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All Online Bill Pay Isn’t the Same

billpayimgOnline bill pay is supposed to be convenient, and don’t get me wrong, it is.  BUT-I wonder if I am the only one still trying to figure out when to arrange to pay bills, at least when using online bill pay.  What’s most frustrating is, it doesn’t seem like much has been done to make online bill payment much easier in terms of figuring out when payments need to be scheduled on the payor’s end and then figuring out when the payments actually clear with the payee. Basically, online bill pay seems to only have substituted the need to take out paper checks and the roll of stamps.  It should be much better than that.

I recently opened up an account with a local credit union, and made my first online bill payment for a credit card bill last month.  I arranged for the bill payment to take place on the due date, which is how I had arranged for payment through my other bank account.  Much to my surprise, when I receive my current month’s statement for the credit card, there was a $25 late fee assessed.  The payment wasn’t “received” by the credit card company until the following day.  (The payment dates were business days)

Of course there are a number of irritating issues that arise from this:

1. That all electronic transfers posted from one’s financial institution to a payee (here, the credit card company) isn’t “immediate.”  (save this topic for another blog)

2. That the period of time differed so widely for the payment to clear between my new credit union and my other bank.

3.  That the disclosures on the number of days to clear a payment with my do not make it simple enough to understand when to schedule a payment.  My bank states “Earliest Date of Delivery” when I schedule a delivery date–so I know a payment would arrive in time.

Of course, there are a number of alternatives cropping up right now to replace a financial institution’s bill payment service, but ultimately, a bank or credit union’s online bill payment service should be easier and most straightforward.

This marks the end of my online bill payment rant.  What better solutions have you found?