Frequently Asked Questions About Prepaid Purchase Cards – Information for Retailers

A prepaid purchase card is an electronic card, a written certificate or other voucher or device with a monetary value, including a gift card and gift certificate.  It is issued or sold in exchange for the future purchase or delivery of goods or services.

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The requirements came into effect on November 1, 2007.

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The requirements do not apply to cards issued or sold before November 1, 2007.

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Expiry dates are not allowed on prepaid purchase cards except:

• if the card is issued or sold for a specific good or service (ex: a manicure)
• if nothing of value is exchanged for the card at the time of issue (ex: cards issued for a promotional or charitable purpose, or as part of a reward or loyalty program).

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If there is an expiry date on a prepaid purchase card that is not allowed, the card remains in effect as if there is no expiry date. The Consumer Protection Act provides for the ability to impose administrative penalties, ranging from $1,000.00 to $5,000.00, for failure to comply with expiry date requirements.

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At the time a prepaid purchase card is issued or sold, the following information must be given to the holder:

• All restrictions, limitations, and conditions that are imposed on the use of the card, including any permitted fee or expiry date, and
• A description of how the holder can obtain information about the card, including any remaining balance.

The information must be given clearly and in a way that it will likely be brought to the holder’s attention.

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No fees can be charged to the holder of a prepaid purchase card except:

• A fee to replace a lost or stolen card
• A fee to customize a card (ex: a personal photograph on the card)
• A maximum $2.50 monthly fee if a card has not been used for 12 months (see examples in question 8), only if the card is one that lets the holder purchase goods or services from multiple unaffiliated sellers (ex: different retailers located within a shopping mall).

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The rule is that a maximum of a $2.50 monthly fee can be charged only after the card has not been active for 12 months.

Example 1:

A card is purchased/activated on November 1st, 2007 and is never used.

The card would be eligible for a maximum monthly fee of $2.50 starting 12 months after the date of purchase (or November 2nd, 2008).

Example 2:

A card is purchased/activated on November 1st, 2007 and is used on February 10th, 2008 and not again.

The card would be eligible for a maximum monthly fee of $2.50 starting 12 months from the last use (or February 11th, 2009).

Example 3:

A card is purchased/activated on November 1st, 2007 and is used on February 10th, 2008. It is used again on August 20th, 2009 and not again.

The card would be eligible for a maximum monthly fee of $2.50 starting 12 months from the first use (or February 11th, 2009). The fee would stop upon the next use of the card (or August 20th, 2009). The card would be eligible for a fee again 12 months from the last use (or August 21st, 2010).

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The rule is that a card is considered to be active when the funds are loaded on the card at the time of purchase, or when the card is used by the holder to purchase goods or services.

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If a fee is charged that isn’t allowed, the holder of the card is entitled to a refund of the fee upon demand. The holder is entitled to the refund anytime within a year after paying the fee.

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If nothing of value is given for the cards at the time they are issued, cards such as those issued for charitable or promotional purposes, or as part of a reward or loyalty program, may have an expiry date and a fee may be charged. The providing of information requirements outlined in question 6 do apply.

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The card was issued to the charity and not the consumer. The consumer makes a donation to the charity when they bid on the card. They do not purchase the card, therefore it may have an expiry date on it.

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In general, a store is not required to take back an item that they have sold to a consumer. If a retailer has a policy to take back items from a consumer when they don’t have proof of purchase, a retailer may give the consumer a gift card specifically for that return and the card may have an expiry date.

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The requirements do not apply to prepaid phone cards, as those cards fall under the jurisdiction of the federal government.

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The requirements do not apply to prepaid purchase cards issued under an agreement between a bank and a consumer, as those cards fall under the jurisdiction of the federal government.

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The Consumer Protection Act provides for the ability to impose administrative penalties, ranging from $1,000.00 to $5,000.00, for failure to comply with expiry date requirements, providing of information requirements, and the limit on fee requirements. It also allows for the ability to prosecute in some circumstances.

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Consumer Protection Office
302–258 Portage Avenue
Winnipeg, Manitoba R3C 0B6

• Telephone (Winnipeg and area): 204-945-3800
• Toll-free within Manitoba: 1-800-782-0067
• Fax: 204-945-0728
• Email: consumers@gov.mb.ca

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The regulation requires completion of a review of all requirements by April 30, 2009. If you have suggestions for improving the requirements for prepaid purchase cards please forward them in writing to:

Consumer Protection Office
302–258 Portage Avenue
Winnipeg, Manitoba
R3C 0B6

• Fax: 204-945-0728
• Email: consumers@gov.mb.ca

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