Consumer Groups Call On Fed to Adopt Stricter Gift Card Rules

/PRNewswire/ -- In comments filed with the Federal Reserve Board today, consumer groups urged regulators to rein in gift card fees and related terms and conditions that can quickly diminish their value. The Fed is considering a set of proposed gift card regulations that are required under the Credit CARD Act of 2009 and will go into effect on February 22, 2010.

"Banks earn billions every year from gift card fees just because consumers don't always get around to using their cards right away," said Michelle Jun, staff attorney with Consumers Union. "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."

Many consumers end up losing money on their gift cards because they don't redeem them right away. A recent Consumer Reports poll found that one quarter of those given gift cards last holiday season still have at least one card they haven't used and 11 percent of recipients have four or more. The TowerGroup estimated that about $8 billion remained unredeemed on gift cards in 2006.

In a letter to the Fed today, Consumers Union, Consumer Action, Consumer Federation of America, and the National Consumer Law Center urged regulators to:

-- Cap the amount that gift card issuers can charge for inactivity fees.
The Credit Card Act of 2009 prohibits card issuers from charging
inactivity fees on cards if they have been used within the past 12
months. After twelve months of inactivity, card issuers will be
allowed to charge a monthly inactivity fee. Consumers Union urged the
Fed to protect consumers more fully by limiting the amount that that
can be charged for inactivity to no more than the actual cost incurred
by card issuers for maintaining the card.

-- Limit fees on low value cards. Consumers Union urged the Fed to
follow the lead of states like California, Oklahoma and Washington
which have limited fees that can be charged for inactivity when the
balance on the card is $5 or less. These states limit card issuers to
charging a $1 per month fee.

-- Limit when inactivity fees can be charged. Many consumers report that
they face difficulties using their gift cards because merchants often
will not accept their cards when they don't cover the full cost of the
purchase or when they cannot determine the remaining amount on the
card. Consumers Union urged the Fed to count such transactions as
"activity" on the card so that consumers don't start incurring
inactivity fees when they've attempted to use them.

-- Make sure consumers are protected from early expiration of gift cards.
Under the Credit Card Act of 2009, gift cards cannot expire less than
five years from the date the card was purchased or money was last
added to the card, whichever is later. However, many gift cards are
stamped with a "valid thru" date," which is the estimated lifespan of
the card's magnetic stripe and could be less than five years from the
time the card was purchased. Consumers Union urged the Fed to require
card issuers to select expiration periods long enough that the card
will have at least five years of remaining life when it is purchased.
Card issuers should be required to disclose on the card that the card
may be valid beyond the date imprinted on it and to provide an 800
phone number on the card that consumers can use to easily find out
when their cards actually expire.

-- Protect consumers from losing funds on lost or stolen prepaid cards.
Prepaid cards are reloadable cards that can be used to make payments
similar to debit cards and are becoming increasingly popular. But
consumers using prepaid cards don't enjoy the same safeguards as debit
cards if their cards are lost or stolen and could end up losing all of
their funds. Consumers Union urged the Fed to ensure that prepaid
cards come with the same protections as debit cards so the consumer's
liability is limited to $50 and he or she can recover missing money.


The new gift card regulations will cover both retailer gift cards and prepaid general use gift cards (the ones that often are branded as Visa, American Express, MasterCard, or Discover). The law does not cover rewards, loyalty, telephone or promotional cards and does not cover paper gift cards or paper gift certificates.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page

Lawmakers Pass Amendment to Exclude Auto Dealers From New Federal Agency

/PRNewswire/ -- The House Financial Services Committee approved a key amendment, 47-21, to keep automobile dealers under the already effective federal and state laws which govern vehicle financing.

The amendment, sponsored by Rep. John Campbell, R-Calif., will not subject auto retailers to the regulations of the proposed Consumer Financial Protection Agency (CFPA), but will continue the full range of consumer protection rules of the Federal Reserve, the Federal Trade Commission and state laws.

The National Automobile Dealers Association (NADA) led a grassroots campaign in support of the Campbell Amendment.

"NADA and dealers across the country applaud the overwhelming bipartisan support for the Campbell Amendment," said David Westcott, chairman of NADA's Government Affairs Committee and a multi-franchise dealer from North Carolina. "It makes sense to exclude dealers. Dealers had absolutely nothing to do with the credit crisis."

H.R. 3126, the Consumer Financial Protection Agency Act, later passed the full committee with the Campbell Amendment included. However, the bill still has a number of other hurdles before reaching the White House for final approval. The House Energy and Commerce Committee, which also has partial jurisdiction over the new agency, will have an opportunity to consider the bill before a House vote. The Senate will have to go through a similar process.

NADA's legislative office, as well as dealers across the country, will continue to be involved throughout the process. "We will continue to work on behalf of consumers and dealers to maintain dealer-assisted financing as an efficient and competitive credit-delivery system," Westcott said.

"We applaud Rep. Campbell for his leadership in building strong bipartisan support in the financial services committee," Westcott said. "The overwhelming majority of committee members clearly understand that CFPA jurisdiction over dealers is unnecessary and that increased uncertainty in the auto marketplace would limit consumer finance options and increase car buyers' costs."

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
www,artsacrossgeorgia.com
Arts Across Georgia

Understanding The Changing Tax Picture

(NAPSI)-As more baby boomers reach retirement age, analysts say it could pay to give some extra thought to taxes.

Indeed, tax efficiency and dividends will become important income streams for a growing number of retirees. And, according to a recent survey, investor interest in tax management strategies-which can help avoid the loss of returns to taxes-is on the rise.

One key to protecting your assets could be to work with a financial advisor, since investors who do so are twice as likely to invest in mutual funds that are specifically designed to minimize the effects of taxes. But it's also important to understand the tax picture. This quick quiz from Eaton Vance could help:

Questions

1. T or F? For the average taxable mutual fund investor, about 2 percentage points of return were surrendered to taxes each year over the past decade.

2. T or F? The highest tax rate on both qualified dividends and long-term capital gains today is 15 percent.

3. T or F? Tax-managed stock funds, municipal bond funds and variable annuities are examples of investments best suited to be held outside of a qualified retirement plan such as an IRA or 401(k).

4. T or F? AMT stands for "Alternative Minimum Tax."

5. T or F? All municipal bonds are "tax-free" and therefore are not subject to the Alternative Minimum Tax.

Answers

1. True. Over the past 10 years, taxable mutual fund investors gave up between 1.3 and 2.2 percentage points of return because of taxes.

2. True. The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the tax rate on qualified dividends and long-term capital gains from almost 39 percent to 15 percent. This now gives investors two incentives to better manage the tax consequences of their investments.

3. True. The optimal use for each of these tax-advantaged investments is outside of a qualified retirement plan. Investors should generally use their qualified retirement plans to shield investments that would otherwise be fully taxable. Investors who are unsure of how best to use qualified plans should consult a financial advisor to help them make the correct investment decisions.

4. True. The Alternative Minimum Tax, or AMT, is calculated alongside ordinary income tax for all households. Under the AMT, taxpayers must pay whichever is higher, the AMT-usually 26 percent to 28 percent of income-or their typical blended tax rate. The AMT was originally adopted in 1969 to ensure that the wealthy would pay taxes. But, because the AMT's exclusion level is not inflation-indexed and incomes have risen, many middle-class American families are now subject to this tax. Without additional legislation, the AMT could affect nearly half of households earning between $75,000 and $100,000 by 2010.

5. False. Municipal bonds issued by entities-such as housing agencies, airports and industrial developers-are subject to the AMT because their use is considered outside of government purposes. These bonds, which comprise about 10 to 12 percent of the overall municipal bond market, are popular with municipal bond investors (including some mutual funds) because they tend to provide income (yield) that is about 0.25 percent higher than similar AMT-free bonds. While this can provide a good source of income for investors who are not subject to the AMT, after-tax yield comparisons between these bonds are not favorable for AMT-paying investors. Because AMT status may not be clear until the end of a tax year, municipal bond investors should ensure that holdings are AMT-free.

For more information or to begin learning how changing government regulations might affect your tax returns in the coming years, visit www.eatonvance.com/mediacenter or call 800-225-6265.

-----
www.fayettefrontpage.com
Fayette Front Page
Community News You Can Use
Fayetteville, Peachtree City, Tyrone
www.georgiafrontpage.com
Georgia Front Page