Electronic Fund Transfers, 50683-50688 [2010-20154]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 75, Number 158 (Tuesday, August 17, 2010)]
[Rules and Regulations]
[Pages 50683-50688]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-20154]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 75, No. 158 / Tuesday, August 17, 2010 / 
Rules and Regulations

[[Page 50683]]



FEDERAL RESERVE SYSTEM

12 CFR Part 205

[Regulation E; Docket No. R-1377]


Electronic Fund Transfers

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Interim final rule; request for public comment.

-----------------------------------------------------------------------

SUMMARY: The Board is amending Regulation E, which implements the 
Electronic Fund Transfer Act, and the official staff commentary to the 
regulation, in order to implement legislation that modifies the 
effective date of certain disclosure requirements in the gift card 
provisions of the Credit Card Accountability Responsibility and 
Disclosure Act of 2009.

DATES: This interim final rule is effective August 22, 2010. Comments 
must be received on or before September 16, 2010.

ADDRESSES: You may submit comments, identified by Docket No. R-1377, by 
any of the following methods:
     Agency Web Site: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: regs.comments@federalreserve.gov. Include the 
docket number in the subject line of the message.
     FAX: (202) 452-3819 or (202) 452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
NW., Washington, DC 20551. All public comments are available from the 
Board's Web site at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. 
Accordingly, your comments will not be edited to remove any identifying 
or contact information. Public comments may also be viewed 
electronically or in paper form in Room MP-500 of the Board's Martin 
Building (20th and C Streets, NW) between 9 a.m. and 5 p.m. on 
weekdays.

FOR FURTHER INFORMATION CONTACT: Ky Tran-Trong, Counsel, Vivian Wong or 
Dana Miller, Senior Attorneys, or Mandie Aubrey, Attorney, Division of 
Consumer and Community Affairs, Board of Governors of the Federal 
Reserve System, Washington, DC 20551, at (202) 452-2412 or (202) 452-
3667. For users of Telecommunications Device for the Deaf (TDD) only, 
contact (202) 263-4869.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

    On May 22, 2009, the Credit Card Accountability Responsibility and 
Disclosure Act of 2009 (Credit Card Act) was signed into law.\1\ 
Section 401 of the Credit Card Act amended the Electronic Fund Transfer 
Act, 15 U.S.C. 1693 et seq., and imposed certain restrictions on a 
person's ability to impose dormancy, inactivity, or service fees with 
respect to gift certificates, store gift cards, and general-use prepaid 
cards. In addition, the Credit Card Act generally prohibited the 
issuance or sale of such products if they expire earlier than five 
years from the date of issuance of a gift certificate or the date on 
which funds were last loaded to a store gift card or general-use 
prepaid card.
---------------------------------------------------------------------------

    \1\ Public Law 111-24, 123 Stat. 1734 (2009).
---------------------------------------------------------------------------

    Section 403 of the Credit Card Act required that the gift card and 
related provisions of the Credit Card Act become effective 15 months 
after enactment, or on August 22, 2010. See EFTA Section 915(d)(3). The 
Board published a final rule implementing the gift card provisions of 
the Credit Card Act on April 1, 2010 (final gift card rule). 75 FR 
16580. As mandated by the Credit Card Act, the final gift card rule has 
an effective date of August 22, 2010.
    Congress recently passed legislation that amends Section 403 of the 
Credit Card Act to delay the effective date of certain gift card 
disclosure provisions of the Credit Card Act for certificates or cards 
produced prior to April 1, 2010 (Gift Card Amendment).\2\ The Gift Card 
Amendment provides a delayed effective date with respect to these 
provisions in order to permit the sale of existing card stock through 
January 31, 2011. Nonetheless, the substantive fee and expiration date 
protections provided by the Credit Card Act continue to apply to those 
certificates or cards sold to a consumer on or after August 22, 2010. 
The interim final rule published today revises the April 2010 final 
gift card rule in order to implement the Gift Card Amendment.
---------------------------------------------------------------------------

    \2\ Public Law 111-209, 124 Stat. 2254 (July 27, 2010).
---------------------------------------------------------------------------

    As discussed in IV. Legal Authority, the Board is issuing this rule 
as an interim final rule based on its determination that, given the 
impending August 22, 2010 effective date of the Credit Card Act and the 
final gift card rule, it would be impracticable to issue a proposal for 
public comment followed by a final rule. However, the Board intends to 
consider comments on this interim final rule for purposes of publishing 
a final rule and may issue final clarifications and amendments to the 
extent appropriate.

II. Summary of Interim Final Rule

    With respect to gift certificates, store gift cards, and general-
use prepaid cards produced prior to April 1, 2010, the Gift Card 
Amendment delays the effective date of the disclosure requirements in 
EFTA Sections 915(b)(3) and (c)(2)(B) (as amended by the Credit Card 
Act) until January 31, 2011, provided that several specified conditions 
are met. This interim final rule implements the Gift Card Amendment.
    While the Gift Card Amendment delays the effective date for certain 
disclosure requirements set forth in the Credit Card Act, the Gift Card 
Amendment does not address the status of additional requirements 
adopted in the Board's final gift card rule. As a result, persons 
seeking to take advantage of the relief afforded by the Gift Card 
Amendment may be unable to do so if certain of these additional 
provisions were to apply after August 22, 2010. For example, Sec.  
205.20(e)(1) prohibits any person from selling or issuing a certificate 
or card unless the consumer has had a reasonable opportunity to 
purchase a certificate or card with at least five years remaining until 
the certificate or card expiration date. Thus,

[[Page 50684]]

a card produced prior to April 1, 2010 that has a card expiration date 
of less than five years could not be sold under the final gift card 
rule, notwithstanding the provisions of the Gift Card Amendment. 
Therefore, in order to carry out the intended purpose of the Gift Card 
Amendment, this interim final rule also delays the effective date of 
certain of these supplemental requirements.
    This interim final rule revises Sec. Sec.  205.20(c) and (g) of the 
final gift card rule (``Form of Disclosures'' and ``Compliance Dates,'' 
respectively) and adds a new Sec.  205.20(h) (``Temporary Exemption'').

III. Section-by-Section Analysis

20(c) Form of Disclosures

20(c)(2) Format
    The Gift Card Amendment requires that certain alternative 
disclosures be made to the consumer in order for an issuer to take 
advantage of the delayed effective date, through in-store signage, 
messages during customer service calls, Web sites, and general 
advertising. These disclosure requirements are implemented through 
Sec.  205.20(h)(2) of the interim final rule, discussed in more detail 
below.
    Section 205.20(c)(2) of the final gift card rule generally requires 
disclosures to be made in writing or electronically, and in retainable 
form. The Board believes such requirements are unnecessary with respect 
to the disclosures required by Sec.  205.20(h)(2). For example, it 
would be impracticable to provide in-store signage under Sec.  
205.20(h)(2) in a retainable form. Moreover, the alternative 
disclosures required by Sec.  205.20(h)(2) are intended to relieve the 
burden of replacing non-compliant card stock with card stock bearing 
disclosures that comply with the final gift card rule, so Board 
believes that the format standards in Sec.  205.20(c)(2) are less 
appropriate in this instance. Thus, Sec.  205.20(c)(2) has been revised 
to provide that the disclosures required by Sec.  205.20(h)(2) need not 
be made in a retainable form. For similar reasons, Sec.  205.20(c)(2) 
is revised to provide that the prior-to-purchase disclosures required 
by Sec.  205.20(c)(3) need not be provided in a retainable form. 
Section 205.20(c)(2) has also been revised to make clear that the 
disclosures required by Sec.  205.20(h)(2) may be provided orally.

20(g) Compliance Dates

20(g)(1) Effective Date for Gift Certificates, Store Gift Cards, and 
General-Use Prepaid Cards
    The final gift card rule becomes effective August 22, 2010, 
consistent with the Credit Card Act. To give effect to the delayed 
effective date set forth in the Gift Card Amendment, the interim final 
rule revises Sec.  205.20(g)(1) to state that, except as provided in 
new Sec.  205.20(h), Sec.  205.20 applies to any gift certificate, 
store gift card, or general-use prepaid card sold to a consumer on or 
after August 22, 2010, or provided to a consumer as a replacement for 
such certificate or card.
20(g)(2) Effective Date for Loyalty, Award, or Promotional Gift Cards
    Section 205.20(g)(2) of the final gift card rule sets forth a 
special transition rule for the disclosure requirements applicable to 
loyalty, award, and promotional gift cards. Specifically, Sec.  
205.20(g)(2) provides that the disclosure requirements in Sec.  
205.20(a)(4)(iii) apply to any card, code or other device provided to a 
consumer in connection with a loyalty, award, or promotional program 
where the period of eligibility for the program begins on or after 
August 22, 2010. The Gift Card Amendment does not specifically delay 
the effective date of the disclosures required by Sec.  
205.20(a)(4)(iii), and accordingly the effective date for loyalty, 
award, and promotional cards remains unchanged in this interim final 
rule.

20(h) Temporary Exemption

20(h)(1) Delayed Effective Date
    As discussed above, the Gift Card Amendment delays the effective 
date of the disclosure requirements in EFTA Sections 915(b)(3) and 
(c)(2)(B) under the Credit Card Act under certain circumstances. 
Section 205.20(h)(1) implements the delayed effective date. 
Specifically, Sec.  205.20(h)(1) provides that, for any gift 
certificate, store gift card, or general-use prepaid card produced 
prior to April 1, 2010, the effective date of the requirements of 
paragraphs (c)(3), (d)(2), (e)(1), (e)(3), and (f) of this section is 
January 31, 2011, provided that an issuer of such certificate or card 
meets several specified conditions.

Provisions of the Final Gift Card Rule Subject to the Delayed Effective 
Date

    Section 205.20(h)(1) delays the effective dates of Sec. Sec.  
205.20(d)(2) and (e)(3)(i) of the final gift card rule. Section 
205.20(d)(2), which implemented EFTA Section 915(b)(3)(A), prohibits 
the imposition of any dormancy, inactivity, or service fee unless, 
among other things, certain specified clear and conspicuous disclosures 
about the fees are made on the certificate or card. Section 
205.20(e)(3)(i), which implemented EFTA Section 915(c)(2)(B), requires 
that the expiration date for the certificate or card's underlying 
funds--or the fact that the underlying funds do not expire--be 
disclosed on the certificate or card. These disclosure requirements are 
subject to the delayed effective date under the Gift Card Amendment for 
certificates or cards produced prior to April 1, 2010.
    In addition, Sec.  205.20(h)(1) delays the effective dates of 
Sec. Sec.  205.20(e)(1), (e)(3)(ii), (e)(3)(iii), and (f). Section 
205.20(e)(1) prohibits the issuance or sale of certificates or cards, 
unless policies and procedures have been established to ensure that a 
consumer will have a reasonable opportunity to purchase a certificate 
or card with at least five years remaining until the certificate or 
card expiration date. Section 205.20(e)(3)(ii) requires the disclosure 
on the certificate or card of a toll-free telephone number, and, if one 
is maintained, a Web site that a consumer may use to obtain a 
replacement certificate or card after expiration if the underlying 
funds may be available. Section 205.20(e)(3)(iii) requires certain 
disclosures on the certificate or card about expiration and replacement 
cards, except where a non-reloadable certificate or card bears an 
expiration date that is at least seven years from the date of 
manufacture. Section 205.20(f) requires additional fee disclosures on 
or with the certificate or card, and, similar to Sec.  
205.20(e)(3)(ii), disclosure on the certificate or card of a toll-free 
telephone number, and, if one is maintained, a Web site that a consumer 
may use to obtain fee information. As discussed in more detail in the 
final gift card rule, these provisions were adopted pursuant to the 
Board's authority under EFTA Sections 904(a) and 915(d)(2), as amended 
by the Credit Card Act.
    Although not mandated by the Gift Card Amendment, the Board 
believes that Sec. Sec.  205.20(e)(1), (e)(3)(iii), and (f) should also 
be subject to the delayed effective date in order to carry out the 
intended purpose of the Gift Card Amendment. For example, some gift 
cards produced before April 1, 2010 may bear expiration dates of less 
than five years, which would not comply with Sec.  205.20(e)(1). If the 
Board did not provide for a delayed effective date with respect to 
Sec.  205.20(e)(1), issuers would not be permitted to sell this 
existing

[[Page 50685]]

card stock, even if issuers otherwise satisfied the statutory 
prerequisites to qualify for relief under the Gift Card Amendment. Such 
a result would undermine the purpose of the Gift Card Amendment.
    Finally, Sec.  205.20(h)(1) delays the effective date of Sec.  
205.20(c)(3). Section 205.20(c)(3) requires that the disclosures 
required by Sec. Sec.  205.20(d)(2), (e)(3), and (f)(1) be disclosed to 
the consumer prior to purchase. As discussed in more detail in the 
final gift card rule, Sec.  205.20(c)(3) was adopted in the final rule 
both pursuant to statutory mandate (in EFTA Section 915(c)(3)(B)) and 
pursuant to the Board's authority under EFTA Section 904(a). For the 
reasons discussed above, under Sec.  205.20(h)(1) of this interim final 
rule, any disclosures that are required to be provided prior to 
purchase under Sec.  205.20(c)(3) are subject to the delayed effective 
date, provided that the issuer complies with the conditions specified 
in Sec.  205.20(h)(1).

Conditions Imposed

    To take advantage of the Gift Card Amendment's delayed effective 
date, an issuer of the certificate or card must meet several specified 
conditions. First, the issuer must comply with the other provisions of 
Sec.  205.20, including the section's substantive restrictions on the 
imposition of fees. Second, the issuer must not impose an expiration 
date with respect to the funds underlying such a certificate or card. 
Third, the issuer must, at the consumer's request, replace such 
certificate or card if the certificate or card has funds remaining at 
no cost to the consumer. Finally, the issuer must satisfy the 
disclosure requirements of new Sec.  205.20(h)(2), discussed in more 
detail below. See Sec. Sec.  205.20(h)(1)(i)-(iv).
    Comment 20(h)(1)-1 explains that certificates or cards produced 
prior to April 1, 2010 may be sold to a consumer for a limited time 
without satisfying the requirements of Sec.  205.20(c)(3), (d)(2), 
(e)(1), (e)(3), and (f), provided that issuers of such certificates or 
cards comply with the additional substantive and disclosure 
requirements of Sec. Sec.  205.20(h)(1)(i)-(iv). In contrast, issuers 
of certificates or cards produced prior to April 1, 2010 need not 
satisfy these additional requirements if the certificates or cards 
fully comply with the April 2010 final gift card rule. Thus, if on 
August 22, 2010 an issuer sells gift cards produced prior to April 1, 
2010 that do not have fees and do not expire, and which otherwise 
comply with the final gift card rule, that issuer would not then be 
required to make the in-store signage and other disclosures required by 
Sec.  205.20(h)(2) with respect to those gift cards because those cards 
satisfy the requirements of the final gift card rule.
    Comment 20(h)(1)-2 clarifies when the temporary relief afforded by 
the Gift Card Amendment expires. This comment explains that 
certificates or cards produced prior to April 1, 2010 that do not fully 
comply with the final gift card rule may not be issued or sold to 
consumers on or after January 31, 2011.
20(h)(2) Additional Disclosures
    In order for an issuer to take advantage of the delayed effective 
date, the Gift Card Amendment requires that certain alternative 
disclosures be made to the consumer. Section 205.20(h)(2) of the 
interim final rule implements these disclosure requirements, largely 
tracking the language of the statute. Specifically, Sec.  205.20(h)(2) 
provides that issuers relying on the delayed effective date in Sec.  
205.20(h)(1) must disclose through in-store signage, messages during 
customer service calls, Web sites, and general advertising, that: (i) 
The underlying funds of such certificate or card do not expire; (ii) 
consumers holding such certificate or card have a right to a free 
replacement certificate or card, accompanied by the packaging and 
materials typically associated with such certificate or card; and (iii) 
any dormancy, inactivity, or service fee for such certificate or card 
that might otherwise be charged will not be charged if such fees do not 
comply with Section 915 of the Electronic Fund Transfer Act.
    In some cases, issuers may not have direct control over in-store 
signage and store advertisements. Accordingly, comment 20(h)(2)-1 
explains that issuers may make the disclosures required by Sec.  
205.20(h)(2) through a third party, such as a retailer or merchant. For 
example, an issuer may have a merchant install in-store signage with 
the disclosures required by Sec.  205.20(h)(2) on the issuer's behalf.
20(h)(3) Expiration of Disclosure Requirements
    The Gift Card Amendment requires the disclosures implemented in 
Sec.  205.20(h)(2) to be maintained until January 31, 2013. The Board 
believes that such a requirement is appropriate with respect to Web 
sites that a certificate or card recipient may visit and phone numbers 
that a recipient may call for more information. For example, a gift 
card recipient may call a customer service phone number printed on the 
card to obtain more information about the card's fees or terms of 
expiration. See Sec.  205.20(h)(3)(ii).
    However, certificates or cards sold on or after January 31, 2011 
must comply with Sec. Sec.  205.20(a)-(f) of the final gift card rule. 
Because consumers would only be able to purchase cards that are fully 
compliant with the Credit Card Act from that date forward, consumers 
purchasing certificates or cards might mistakenly believe that the 
disclosures on the signage are applicable to their certificates or 
cards. Thus, the Board believes that requiring issuers to maintain 
advertisements or in-store signage on or after January 31, 2011 which 
reference certificates or cards that are no longer permitted to be 
issued or sold, could be confusing and even misleading to consumers.
    For this reason, the Board is exercising its exception authority in 
EFTA Section 904(c) to provide that, with respect to in-store signage 
and general advertising, the disclosure requirements of Sec.  
205.20(h)(2) are not required to be provided on or after January 31, 
2011. See Sec.  205.20(h)(3)(i). Section 904(c) of the EFTA provides 
that regulations prescribed by the Board may contain any 
classifications, differentiations, or other provisions, and may provide 
for such adjustments or exceptions for any class of electronic fund 
transfers that in the judgment of the Board are necessary or proper to 
effectuate the purposes of the title, to prevent circumvention or 
evasion, or to facilitate compliance.

IV. Legal Authority

General Rulemaking Authority

    Section 401(d)(1) of the Credit Card Act directs the Board to 
prescribe rules to carry out the gift card requirements of the Credit 
Card Act. The Board is exercising its authority under Section 401(d)(1) 
to implement the provisions of the Credit Card Act as superseded by the 
Gift Card Amendment with respect to the delayed effective date of the 
requirements in Sec. Sec.  205.20(d)(2) and (e)(1)(i), and part of 
Sec.  205.20(c)(3).
    In addition, Section 401(d)(2) of the Credit Card Act requires the 
Board to determine the extent to which the individual definitions and 
provisions of the EFTA and Regulation E should apply to gift 
certificates, store gift cards, and general-use prepaid cards. See EFTA 
Section 915(d)(2); 15 U.S.C. 1693m(d)(2). Further, Section 904(a) of 
the EFTA authorizes the Board to prescribe regulations necessary to 
carry out the purposes of the title. The express purposes of the EFTA 
are to establish ``the rights, liabilities, and responsibilities of 
participants in electronic fund transfer systems'' and to provide 
``individual consumer rights.''

[[Page 50686]]

See EFTA Section 902(b); 15 U.S.C. 1693. The Board is exercising its 
authority under EFTA Sections 904(a) and 915(d)(2) for the reasons 
discussed above to provide for the delayed effective date of the 
disclosure requirements of Sec. Sec.  205.20(e)(1), 205.20(e)(3)(ii)-
(iii), and 205.20(f), and part of Sec.  205.20(c)(3).
    Finally, as discussed above, the Board is exercising its authority 
under EFTA Section 904(c) to implement Sec.  205.20(h)(3)(i), which 
clarifies that, with respect to in-store signage and general 
advertising, the disclosures required by Sec.  205.20(h)(2) are not 
required to be provided on or after January 31, 2011.

Authority To Issue Interim Final Rule Without Notice and Comment

    The Administrative Procedure Act (5 U.S.C. 551 et seq.) (APA) 
generally requires public notice before promulgation of regulations. 
See 5 U.S.C. 553(b). Unless notice or hearing is required by statute, 
however, the APA provides an exception ``when the agency for good cause 
finds (and incorporates the finding and a brief statement of reasons 
therefor in the rules issued) that notice and public procedure thereon 
are impracticable, unnecessary, or contrary to the public interest.'' 5 
U.S.C. 553(b)(3)(B). The Board finds that, with respect to this 
rulemaking, there is good cause to conclude that providing notice and 
an opportunity to comment within the timeframe mandated by Congress is 
impracticable.
    The gift card provisions of the Credit Card Act are effective 
August 22, 2010, and the Gift Card Amendment delays this effective date 
only with respect to certain specified disclosure provisions. The time 
period remaining before August 22, 2010 does not provide sufficient 
time for the Board to prepare proposed regulations and publish them in 
the Federal Register; provide a reasonable period for interested 
parties to review the proposal and prepare comments; analyze the 
comments submitted; and prepare the final regulations and publish them 
in the Federal Register. Even if the Board were able to technically 
comply with the notice-and-comment process required by Sec.  553 within 
the allotted time, such a process would not comply with the purpose of 
the APA because interested parties would not have sufficient time to 
prepare well-researched comments and the Board would not have time to 
conduct a meaningful review and analysis of those comments. 
Furthermore, a notice-and-comment process would leave no time between 
the issuance of final regulations and August 22, 2010 for affected 
parties to adjust their procedures in order to comply. In contrast, the 
adoption of an interim final rule enables the Board to provide guidance 
in advance of the effective date and provides affected parties with 
more time to comply with the statutory provisions.

Authority To Issue an Interim Final Rule With an Effective Date of 
August 22, 2010

    Because the gift card provisions of the Credit Card Act, and the 
rule promulgated thereunder, are effective on August 22, 2010, the 
Board's interim final rule implementing those provisions is also 
effective on that date. The APA generally requires that rules be 
published not less than 30 days before their effective date. See 5 
U.S.C. 553(d). As with the notice requirement, however, the APA 
provides an exception when ``otherwise provided by the agency for good 
cause found and published with the rule.'' Id. Sec.  553(d)(3).
    Notwithstanding the time saved by issuing an interim final rule 
without advance notice and the similarity of the new statutory 
provisions to regulations previously issued by the Board, the effective 
date is less than 30 days away, and thus it would not be possible to 
issue final regulations 30 days before the August 22, 2010 effective 
date. Accordingly, the Board finds that good cause exists to publish 
the interim final rule less than 30 days before the effective date.
    Similarly, although 12 U.S.C. 4802(b)(1) generally requires that 
new regulations and amendments to existing regulations imposing 
additional reporting, disclosure or other requirements on insured 
depository institutions take effect on the first day of the calendar 
quarter which begins on or after the date on which the regulations are 
published in final form, the Board has determined that--for the reasons 
discussed above--there is good cause for making the interim final rule 
effective on August 22, 2010. See 12 U.S.C. 4802(b)(1)(A) (providing an 
exception to the general requirement when ``the agency determines, for 
good cause published with the regulation, that the regulations should 
become effective before such time''). The Board also believes that 
providing the affected parties with guidance regarding compliance with 
the Gift Card Amendment as soon as possible is consistent with 12 
U.S.C. 4802(b)(1)(C), which provides an exception to the general 
requirement when ``the regulation is required to take effect on a date 
other than the date determined under [12 U.S.C. 4802(b)(1)] pursuant to 
any other Act of Congress.'' The remaining provisions of the rule are 
effective on August 22, 2010.

V. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an 
initial and final regulatory flexibility analysis only when 5 U.S.C. 
553 requires publication of a notice of proposed rulemaking. See 5 
U.S.C. 603(a), 604(a). As discussed in IV. Legal Authority, however, 
the Board has found good cause under 5 U.S.C. 553(b)(3)(B) to conclude 
that, with respect to this interim final rule, publication of a notice 
of proposed rulemaking is impracticable. Accordingly, the Board is not 
required to perform an initial or final regulatory flexibility 
analysis. Nonetheless, in order to solicit additional information from 
small entities subject to the interim final rule, the Board is 
publishing an interim final regulatory flexibility analysis. Based on 
its analysis and for the reasons stated below, the Board believes that 
the interim final rule is not likely to have a significant economic 
impact on a substantial number of small entities.
    1. Statement of the need for, and objectives of, the final rule. 
This interim final rule implements the Gift Card Amendment by delaying 
the effective date of certain disclosures required by the Credit Card 
Act. This interim final rule also carries out the intended purpose of 
the Gift Card Amendment by delaying the effective date of certain 
supplemental requirements adopted the final gift card rule. The Board 
believes that these revisions to Regulation E are within Congress's 
broad grant of authority to the Board to adopt provisions that carry 
out the purposes of the Credit Card Act and to facilitate compliance 
with the EFTA. These revisions facilitate compliance with the EFTA by 
permitting gift certificates, store gift cards, and general-purpose 
prepaid cards produced prior to April 1, 2010 to be sold through 
January 31, 2011, even if they do not state the disclosures required 
under the final gift card rule, so long as consumers continue to 
receive specified substantive protections with respect to certificate 
or card fees and expiration dates.
    2. Small entities affected by the interim final rule. The number of 
small entities affected by this interim final rule is unknown, as 
discussed in more detail in the Regulatory Flexibility Analysis in the 
final gift card rule. 75 FR 16610 (Apr. 1, 2010). The delayed effective 
date of certain disclosures on certificates and cards will reduce the 
burden and compliance costs for small

[[Page 50687]]

institutions by providing relief from the requirement to remove and 
destroy non-compliant certificates and cards and to replace them with 
compliant certificates or cards, so long as consumers are provided 
substantive rights under the rule and so long as alternative specified 
disclosures are made.
    3. Reporting, recordkeeping, and compliance requirements. The 
compliance requirements of this interim final rule are described above 
in Part III. Section-by-Section Analysis.
    4. Steps taken to minimize economic impact on small entities. As 
previously noted, the interim final rule implements the statutory 
mandate to delay the effective date of certain gift card provisions of 
the Credit Card Act. The interim final rule also delays the effective 
date of certain additional requirements finalized in the April 2010 
final gift card rule. As such, the interim final rule minimizes the 
economic impact of the final gift card rule on small entities.
    5. Other Federal rules. The Board has not identified any Federal 
rules that duplicate, overlap, or conflict with the interim final 
revisions to Regulation E.

VI. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (PRA) of 1995 (44 
U.S.C. 3506; 5 CFR 1320 Appendix A.1), the Board reviewed the interim 
final rule under the authority delegated to the Board by the Office of 
Management and Budget (OMB). The collection of information that is 
subject to the PRA by this interim final rule is found in 12 CFR part 
205. The Federal Reserve may not conduct or sponsor, and an 
organization is not required to respond to, this information collection 
unless the information collection displays a currently valid OMB 
control number. The OMB control number is 7100-0200.
    This information collection is required to provide benefits for 
consumers and is mandatory. See 15 U.S.C. 1693 et seq. Since the Board 
does not collect any information, no issue of confidentiality arises. 
The respondents/recordkeepers are for-profit financial institutions, 
including small businesses. Institutions are required to retain records 
for 24 months, but this regulation does not specify types of records 
that must be retained.
    The Gift Card Amendment amends Section 403 of the Credit Card Act 
to delay the effective date of certain gift card disclosure provisions 
of the Credit Card Act for certificates or cards produced prior to 
April 1, 2010. The Gift Card Amendment provides an extended effective 
date with respect to these provisions in order to permit the sale of 
existing card stock until January 31, 2011. The interim final rule 
published today revises the April 2010 final gift card rule in order to 
implement the Gift Card Amendment.
    While the interim final rule delays the implementation of several 
disclosure requirements (Sec. Sec.  205.20(c)(3), (d)(2), (e)(1), and 
(e)(3)), and temporarily implements several other requirements 
(Sec. Sec.  205.20(h)), it does not change the overall burden 
associated with Regulation E. The Federal Reserve believes that the 
original burden estimates are more than sufficient to cover the 
temporary requirements. The estimates and total burden (738,600 hours) 
therefore will remain unchanged as published in the final rule. The 
Federal Reserve continues to expect that the amount of time required to 
implement each of the proposed changes for a given institution may vary 
based on the size and complexity of the respondent.
    The other Federal financial agencies are responsible for estimating 
and reporting to OMB the total paperwork burden for the institutions 
for which they have administrative enforcement authority. They may, but 
are not required to, use the Federal Reserve's burden estimation 
methodology. Using the Federal Reserve's method, the total annual 
burden for the respondents regulated by the Federal financial agencies 
is estimated to be 4,430,659 hours. This estimate also remains 
unchanged.
    The Federal Reserve has a continuing interest in the public's 
opinions of our collections of information. At any time, comments 
regarding the burden estimate, or any other aspect of this collection 
of information, including suggestions for reducing the burden, may be 
sent to: Secretary, Board of Governors of the Federal Reserve System, 
Washington, DC 20551; and to the Office of Management and Budget, 
Paperwork Reduction Project (7100-0200), Washington, DC 20503.

List of Subjects in 12 CFR Part 205

    Consumer protection, Electronic fund transfers, Federal Reserve 
System, Reporting and recordkeeping requirements.

0
For the reasons set forth in the preamble, the Board amends 12 CFR part 
205 and the Official Staff Commentary, as follows:

PART 205--ELECTRONIC FUND TRANSFERS (REGULATION E)

0
1. The authority citation for part 205 continues to read as follows:

    Authority:  15 U.S.C. 1693b.

0
2. Section 205.20 is amended as follows:
0
A. Paragraph (c)(2) is revised.
0
B. Paragraph (g)(1) is revised.
0
C. New paragraph (h) is added.


Sec.  205.20  Requirements for gift cards and gift certificates.

* * * * *
    (c) * * *
    (2) Format. Disclosures made under this section generally must be 
provided to the consumer in written or electronic form. Except for the 
disclosures in paragraphs (c)(3) and (h)(2), written and electronic 
disclosures made under this section must be in a retainable form. Only 
disclosures provided under paragraphs (c)(3) and (h)(2) of this section 
may be given orally.
* * * * *
    (g) * * *
    (1) Effective date for gift certificates, store gift cards, and 
general-use prepaid cards. Except as provided in paragraph (h), the 
requirements of this section apply to any gift certificate, store gift 
card, or general-use prepaid card sold to a consumer on or after August 
22, 2010, or provided to a consumer as a replacement for such 
certificate or card.
* * * * *
    (h) Temporary exemption--(1) Delayed effective date. For any gift 
certificate, store gift card, or general-use prepaid card produced 
prior to April 1, 2010, the effective date of the requirements of 
paragraphs (c)(3), (d)(2), (e)(1), (e)(3), and (f) of this section is 
January 31, 2011, provided that an issuer of such certificate or card:
    (i) Complies with all other provisions of this section;
    (ii) Does not impose an expiration date with respect to the funds 
underlying such certificate or card;
    (iii) At the consumer's request, replaces such certificate or card 
if it has funds remaining at no cost to the consumer; and
    (iv) Satisfies the requirements of paragraph (h)(2) of this 
section.
    (2) Additional disclosures. Issuers relying on the delayed 
effective date in Sec.  205.20(h)(1) must disclose through in-store 
signage, messages during customer service calls, Web sites, and general 
advertising, that:
    (i) The underlying funds of such certificate or card do not expire;
    (ii) Consumers holding such certificate or card have a right to a 
free replacement certificate or card, accompanied by the packaging and 
materials typically associated with such certificate or card; and
    (iii) Any dormancy, inactivity, or service fee for such certificate 
or card that might otherwise be charged will not

[[Page 50688]]

be charged if such fees do not comply with Section 915 of the 
Electronic Fund Transfer Act.
    (3) Expiration of additional disclosure requirements. The 
disclosures in paragraph (h)(2) of this section:
    (i) Are not required to be provided on or after January 31, 2011, 
with respect to in-store signage and general advertising.
    (ii) Are not required to be provided on or after January 31, 2013, 
with respect to messages during customer service calls and Web sites.

0
3. In Supplement I to part 205, under Section 205.20, new paragraph 
20(h) is added to read as follows:

Supplement I to Part 205--Official Staff Interpretations

* * * * *
Section 205.20--Requirements for Gift Cards and Gift Certificates
* * * * *

20(h) Temporary Exemption

Paragraph 20(h)(1)--Delayed Effective Date
    1. Application to certificates or cards produced prior to April 1, 
2010. Certificates or cards produced prior to April 1, 2010 may be sold 
to a consumer on or after August 22, 2010 without satisfying the 
requirements of Sec.  205.20(c)(3), (d)(2), (e)(1), (e)(3), and (f) 
through January 30, 2011, provided that issuers of such certificates or 
cards comply with the additional substantive and disclosure 
requirements of Sec. Sec.  205.20(h)(1)(i) through (iv). In contrast, 
issuers of certificates or cards produced prior to April 1, 2010 need 
not satisfy these additional requirements if the certificates or cards 
fully comply with the rule (Sec. Sec.  205.20(a) through (f)). For 
example, for gift cards produced prior to April 1, 2010 that do not 
have fees and do not expire, and which otherwise comply with the rule, 
the in-store signage and other disclosures required by Sec.  
205.20(h)(2) are not required with respect to those gift cards because 
those cards satisfy the requirements of the rule.
    2. Expiration of temporary exemption. Certificates or cards 
produced prior to April 1, 2010 that do not fully comply with 
Sec. Sec.  205.20(a) through (f) may not be issued or sold to consumers 
on or after January 31, 2011.
Paragraph 20(h)(2)--Additional Disclosures
    1. Disclosures through third parties. Issuers may make the 
disclosures required by Sec.  205.20(h)(2) through a third party, such 
as a retailer or merchant. For example, an issuer may have a merchant 
install in-store signage with the disclosures required by Sec.  
205.20(h)(2) on the issuer's behalf.
    2. General advertising disclosures. Section 205.20(h)(2) does not 
impose an obligation on the issuer to advertise gift cards.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, August 11, 2010.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 2010-20154 Filed 8-16-10; 8:45 am]
BILLING CODE 6210-01-P