Extending Effective Date of Gift Card Provisions of Credit Card Law

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Mr. HINOJOSA. Mr. Speaker, I yield myself such time as I may consume.

I rise in strong support of H.R. 5502, legislation that extends the effective date of the gift card provisions of the Credit Card Act of 2009 to January 31, 2011, 15 months after enactment of the Credit Card Act.

On March 23, 2010, the Federal Reserve Board issued final rules implementing the gift card provisions of the Credit Card Act of 2009. These rules, which appropriately restrict gift card fees and expiration dates, offer important protections for consumers. The rules become effective on August 22, 2010, just prior to the start of the 2010 holiday season. Because of the timing of the effective date of the rules and the approaching holiday season, as well as the technical disclosure requirements set forth in the Credit Card Act of 2009, millions of gift cards currently in the stream of commerce will be out of compliance with this law's disclosure provisions unless we pass this bill.

The challenges presented to retailers who rely on the sales of gift cards would be significant, as they would likely be faced with empty gift card displays for a period of time while the cards are removed, while they are destroyed and reproduced and redisplayed. And most importantly, Mr. Speaker, customers would be inconvenienced and dissatisfied.

Several of us here in Congress believe this is contrary to congressional intent contemplated when Congress passed the Credit Card Act of 2009 or when the Federal Reserve Board issued its final rules. Such waste and destruction is unnecessary, especially in light of the fact that there is an existing rule in place that the industry would be compliant with as it sold off existing inventory. A reasonable transition period is needed to sell through current card inventory and comply with the disclosure provisions in the final rules to serve consumers, to mitigate environmental impact, and reduce substantial costs incurred by the prepaid card industry and sellers, many of which are small businesses. Extending the gift card provisions by 15 months will address all of these concerns.

I want to take this opportunity to commend my colleague Congressman Dan Maffei of New York, as well as Jillian Martin on his staff, for authoring this important legislation and ensuring that it complies with all the other requirements in the Credit Card Act of 2009.

I urge my colleagues to support this legislation.

I reserve the balance of my time.

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