OTS Releases Guidance on Gift Cards

The Office of Thrift Supervision (OTS) issued guidance on Friday to thrifts that offer gift card programs. According to the OTS press release, approximately 20% of the institutions it regulates issue gift cards in some form. The guidance covers both open-loop or branded cards (e.g., Visa, MasterCard, American Express) as well as closed-loop cards which are typically limited to a single merchant. The OTS document doesn't say much of anything new or helpful, but it does summarize the current state of things. Federal savings associations should follow applicable federal rules, including:

• OTS's advertising rule
• OTS's nondiscrimination rule
• Federal Trade Commission prohibitions on unfair or deceptive trade practices
• Bank Secrecy Act regulations
• USA PATRIOT Act
• OTS's Funds Transfer Rule
• OTS's Electronic Operations Rule
  

As to the $64,000 question -- what's an appropriate anti-money laundering program under the BSA or an appropriate customer identification program under the PATRIOT Act -- there's not much help. Follow risk-based internal controls for an institution of your size and type of business.

The guidance does reiterate the conclusion of an OTS legal opinion from last summer that federal law preempts many state law restrictions on gift cards issued by federal savings associations.

And be sure to check out the OTS's new Consumer Fact Sheet: Buying, Giving, and Using Gift Cards. They went all out on the graphics.