CARD Act: Top 10 Things You Need to Do

On August 22, 2010, the federal CARD Act becomes effective¹. The Act affects virtually all prepaid products regardless of their manner of access (e.g., plastic cards, digital codes, bar codes, account numbers, email offers), as well as almost all rewards, promotions, incentives, rebates and similar offerings and programs (collectively referred to herein as Cards). Many companies, including retailers, distributors, incentive companies, promotional companies, marketers, manufacturers, telecom companies, virtual worlds, sports and entertainment companies, and others are just learning about the scope and impact of this new law.

The CARD Act applies to a prepaid Card product sold to a consumer on or after August 22, 2010, or provided to a consumer as a replacement for such product. It applies to loyalty, award and promotional Cards issued through a loyalty, award or promotional program where the period of eligibility for the program begins after August 21, 2010.

Federal law provides that a consumer cannot waive his or her rights under the CARD Act or agree to contrary provisions. State laws that are consistent with the CARD Act are not preempted by the CARD Act provisions², which means the CARD Act provides a minimum floor. State laws that provide greater protection for consumers are not inconsistent with the CARD Act. Accordingly, for any covered program, care must be taken to comply with the CARD Act provisions, and to determine whether state law also mandates additional disclosures or actions, or otherwise prohibits charges or expiration dates.

We offer a brief summary of the scope and impact of the Act and a list of 10 action steps companies should consider taking immediately, especially as there are less than 12 weeks until the new law becomes effective and full compliance is required.

1. Title IV of the federal Credit Card Accountability, Responsibility and Disclosure Act of 2009 was signed into law by President Obama on May 22, 2009. The CARD Act amends the federal Electronic Funds Transfer Act (EFTA) and the Final Rule, issued by the Federal Reserve Board (Board) on March 23, 2010, amends the EFTA’s implementing regulation (Reg E).
2. There may be other bases for preemption for certain bank issued Cards under other federal laws, e.g., the National Bank Act.

Download: CARD Act: Top 10 Things You Need to Do