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Consumers don't understand the expenses and restrictions that come with general purpose gift cards issued by Visa, MasterCard or American Express, according to a new survey by two consumer advocacy groups.

Only 33 percent of respondents knew the cards cost $4 to $7 to purchase, and only 54 percent were aware that many issuers start charging a monthly fee six to 12 months after purchase, said Consumer Federation of America and the National Association of Consumer Agency Administrators.

"Consumers clearly like the convenience and flexibility of general purpose gift cards, but also are largely unaware of their costs and risks," CFA Executive Director Stephen Brobeck said in a statement this week.

General purpose gift cards, which can be used anywhere credit cards are accepted and are issued by credit card companies and national banks, are not covered by the New Jersey law on gift cards. That's because the institutions that issue them are regulated at the federal, not state, level. New Jersey law, which prohibits expiration or monthly fees for at least two years after purchase, applies only to those cards issued by retailers.

However, the federal CARD Act, which expands consumer protection regarding credit cards, will prohibit fees from being charged on gift cards if they have been used in the previous 12 months. But that portion of the act doesn't take effect until August.

And as of Sept. 20, American Express voluntarily stopped charging monthly fees on all its general purpose gift cards.

The two consumer advocacy groups have prepared a brochure on general purpose gift cards, and 1.5 million of them will be distributed.

For a free copy of the brochure, visit www.consumerfed.org and click on "What's New at CFA," then "Educational Resources."by American Express to major retailers.

"Gift cards will be popular gifts this holiday season, and it is vital that consumers know the rules to get the best for their hard-earned money," NACAA President Elisabeth Owen said.

Here are some tips from the brochure:

• Pay attention to the card's expiration date and charges, especially the initial purchase price and any monthly charges, usually assessed after six to 12 months.
• Alert the receiver to the expiration date, and to use the card before the monthly charges begin. The sooner the cards are used, the more likely all the value will be used, according to previous surveys. Those surveys found that an average of 11 percent of all such gift card value is never used by the recipient because of fees and expiration dates.
• Of the people who have received the cards, 17 percent said they had trouble using the entire balance because stores refused to split payment on a purchase greater than the card's balance.

Consumer Action will respond to each properly submitted letter about a problem or question, either in this column or by letter or phone. Letters must include copies - not originals - of all relevant documentation and a name, address and phone number at which you can be reached. Send letters to: Consumer Action, The Press, 11 Devins Lane, Pleasantville, NJ 08232.

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