The Consumer Memo, 11/16:New gift-card rules to protect consumers

Gift cardsThe Federal Reserve announced rules to protect consumers from “unexpected costs” on gift cards, including prohibiting fees if the card is inactive for as long as one year.

The proposed regulations, which apply to retail gift cards that can be redeemed at stores, would require “clear and conspicuous” notice of fees, and prohibit more than one inactivity or service fee a month.

The rules require gift cards to remain valid for at least five years after they’re bought and retailers won’t be able to charge for replacing an expired card if money remains on the card, the Fed said in a statement Monday.

Gift cards were the most-desired present among consumers with 55.2 percent saying they would like to receive one this holiday season, according to a survey of 8,431 people conducted by BIGresearch for the National Retail Federation. Holiday gift-card spending was estimated at $24.9 billion in 2008, the federation said.

The rules won’t apply to reloadable or prepaid cards that aren’t marketed as gift cards, such as those in a rewards program.

This is the Fed’s second announcement on consumer protections in less than a week. On Nov. 12, the Fed announced measures requiring consumers to opt in on overdraft fees at automated teller machines and debit cards.

The gift-card rules are part of the Credit Card Accountability Responsibility and Disclosure Act, which was signed into law by President Barack Obama on May 22, the Fed said. The rules take effect in February and retailers have until August to comply.

American Express Co., the biggest U.S. issuer of prepaid gift cards, said Sept. 30 it will eliminate inactivity fees for unused cards. The company said it was dropping the fees following consumer complaints and a reduction in costs.

Bus safety
The U.S. government wants to monitor operator fatigue, ban driver cell-phone use and require the installation of seat belts on motorcoach buses as part of a plan to improve safety.

Transportation Secretary Ray LaHood, who helped ban federal employees from texting while driving, proposed the commercial bus safety steps in a plan posted Monday on the Transportation Department’s Web site.

Motorcoach buses transport about 750 million travelers annually with about 19 passengers dying each year in crashes for the past decade, the agency said.

The National Transportation Safety Board, which investigates transportation accidents, last month called for better federal oversight of motorcoach operators in a hearing on a 2008 crash in Sherman, Texas, that killed 17 people when a bus plunged over a highway guard rail.

Nordstrom replenishing inventories
Nordstrom Inc. is seeking early delivery of orders to replenish its stock after sales exceeded its expectations as it entered the holiday-selling season.

The Seattle-based retailer’s merchandise buyers are spending more to purchase products for most of the chain’s departments, said Pete Nordstrom, president of merchandising.

UPS project slightly higher holiday volume

United Parcel Service Inc. projected moving 400 million packages in the peak holiday shipping season, “up slightly” from a year earlier when it scrapped a forecast because of the recession.

Dec. 21 will be the busiest day, with volume of 22 million shipments, UPS said Monday. That would match the previous record forecast, set in 2007. UPS doesn’t report results after releasing its estimates.

Tax credit fallout
A $400 tax credit provided by the economic stimulus plan may leave more than 15.4 million Americans owing money to the IRS because of under-withholding from their paychecks, an inspector general report said. The IRS said the number will be far lower.

The Treasury Inspector General for Tax Administration said many employers advanced more than the $400-per-individual benefit provided by President Barack Obama’s “making work pay” tax credit. Workers will have to return the difference when they file tax returns with the Internal Revenue Service beginning in January, and some may be forced to pay penalties.

YouTube seeks Spanish-speaking users

YouTube, the video-sharing site owned by Google Inc., will start carrying Univision Communications Inc. programming to lure Spanish-speaking users.

The companies will share revenue from advertising on and around the programs, with Univision getting the majority of the sales, said Chris Maxcy, head of content partnerships at YouTube.The content, including TV programs and celebrity interviews, will come from three Univision networks and includes past and newer videos.