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Annual Montgomery County Gift Card Survey
The Montgomery County (MD) Office of Consumer Protection issued its annual Gift Card Report. This year's report is kinder to retailer-branded gift cards than in past years, but continues to hit network branded cards hard, largely because of the imposition of fees. The report does not acknowledge that fees are integral to the business model for network branded cards (because profit is not generated from the sale of merchandise as with retailer-branded cards) and that fees, in addition to supporting consumer protections and customer service, help provide consumers with a plethora of gift card options to meet their varied gift-giving needs. Despite the underlying anti-fee bias, the report presents considerable useful data on the terms and conditions of 22 retailer branded and 20 network branded cards.
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As it has for the past four years, the Montgomery County (MD) Office of Consumer Protection issued its annual Gift Card Report. This year’s report reviews 20 network branded gift cards and 22 retailer-branded gift cards.
View the Report >
View the Press Release >
Although it is unlikely that reading a report on gift cards authored by a consumer group will be a positive experience for members of the prepaid industry, the Montgomery Country report is interesting in that it generally avoids grandstanding and provides interesting data on the network branded and retailer branded cards it purchased as part of its research.
The report suggests that retailers, overall, are making their gift cards more user friendly by eliminating expiration dates and maintenance fees. It includes cards issued by 18 retailers on its “recommended list” and advises consumers to avoid gift cards issued by the other four “because they carry fees or expiration dates.”
The report is not as positive about network branded gift cards, which it calls bank-issued cards, largely because all have fees and expiration dates—obviously a deal-breaker for consumer groups, which do not recognize the business model necessity of those features nor the benefit of near-universal acceptance of network branded gift cards and consumer protections.
Despite the attention-grabbing headline, “Best and Worst Retail Cards; A Deeper View of Bank Cards Doesn't Improve Their Look,” the detailed analysis of network branded gift cards shows that (i) no card has an expiration date of less than six months and that 13 of the 20 cards have expiration dates of a year or longer—up to 42 months, (ii) there is healthy price competition among cards (ranging from a purchase price of $2 to $10.90 for a card that includes shipping), and (iii) all 20 cards may be replaced if a card is lost or stolen, although there are fees for card replacement.
The report specifically calls out several network branded gift cards for not following the guidance on disclosure issued by the Comptroller of the Currency in 2006.
In highlighting the negatives of network branded prepaid cards, the report goes to significant length to address split tender issues, while acknowledging that ALL 20 gift cards surveyed covered split tender in their disclosure. The report also includes a significant section on “breakage,” citing the same 2006 TowerGroup research used by Consumer Reports in its New York Times advertisement.
One small bright note, this year’s report was more cognizant of not using pejorative terms such as “a slew of fees” that it used in past reports when referring to network branded gift cards. Also, this year the report omitted listing as a gift card one card that clearly was a general purpose reloadable prepaid card.
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