News Release

Contact Information

FOR IMMEDIATE RELEASE November 9, 2004

Contact Rebecca Reid at 202-342-2922

National Survey Indicates Consumers Still Wild About Gift Cards

Majority of Consumers Fear Increased Regulation
Will Limit Options and Decrease Gift Card Value

Washington, D.C. (November 9, 2004) – A recent poll shows most consumers appreciate receiving a card for the holidays or their birthday – a gift card – that is, and they fear that the trend toward regulating the plastic wallet-sized gifts will limit the variety in card options now available and possibly increase the cost.

"Most of us are aware of the popularity of gift cards, clearly seen in the rising number of consumers who love both purchasing and receiving them," said Susan Molinari, National Chairperson for Americans for Consumer Education and Competition (ACEC). "ACEC wanted to get to the heart of the matter on the regulation movement afoot in several states to see what consumers think about the possible impact on their freedom of choice. The survey results speak for themselves."

According to ACEC’s national survey, 60 percent of consumers believe that increased regulation will ultimately foster an environment with higher card fees and fewer gift card-purchasing options. Thirteen states, including New York and California, have either enacted or are considering legislation that, in some cases, would require elimination of gift card fees altogether, making it more difficult for issuers to continue providing the variety of card options.

Bank-issued gift cards, which can be used at a wide range of merchant locations, carry some fees because the issuing bank incurs costs to maintain the account, to ensure consumers are protected against fraud and unauthorized use, and to process each transaction. These fees are disclosed to the consumer either directly on the card itself or in the card packaging.

Proponents of legislation to control fees have alleged that consumers lack knowledge of fees or that “hidden” fees penalize consumers by decreasing the value of an unused gift card over time. However, ACEC’s poll shows that 56 percent of consumers are aware of the fees and the majority of those who receive gift cards tend to spend the entire value of the card in the first month, thereby avoiding any fees for delayed use.

"ACEC promotes consumer education and competition," said Molinari. "This survey shows that consumers are pretty well educated about gift cards and they want to continue to pick and choose from a variety of products that suit their needs and desires – which means, they want a healthy, competitive gift card market. If it isn’t broken, there’s nothing to fix."

The majority of consumers polled, even after they were reminded of the gift card fees, still believe the gift card is a desirable product. Interestingly, while 76 percent say they are more likely to receive gift cards for a specific retailer or restaurant, 63 percent say they would prefer a gift card they could use anywhere, such as those offered by Visa and other payment brands.

"As we move into the holiday season, more consumers are expected to purchase gift cards this year than in the past. That consumer involvement is a sign of a healthy economy and a versatile product that is attractive to young and old and everyone in between," said Molinari. "Consumers have been dealt a good hand with a number of cards to choose from. We should protect that choice by keeping buyers informed and educated and leaving purchasing decisions in their hands."

ACEC polled 1,000 individuals nationwide over the age of 18. The majority of individuals who participated in the poll prefer receiving gift cards to a traditional gift for birthdays or holidays. Seventy-four percent had received a gift card as a present and many received multiple gift cards in the past year. To view the complete survey, visit ACEC’s website at acecusa.org.

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Americans for Consumer Education and Competition is a consumer education group that has the support of Visa USA, the Independent Community Bankers of America (ICBA) and financial industry experts who are working to establish an educational environment in America where financial literacy is promoted and improved among our young people. In addition, ACEC serves as a clearing-house for information on financial issues, as the organization monitors, tracks and provides analysis of financial legislation and litigation that has a direct impact on consumers.

FOR MORE INFORMATION, CONTACT:

Rebecca Reid
Executive Director
Americans for Consumer Education & Competition
202-342-2922
Cell: 410-212-3843