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21.3.1 Establishing Stored Value Cards or Gift Card Programs

Policy Statement

All University of Illinois System merchant units that sell “stored value cards” or “gift cards” must comply with federal and state laws, specifically those listed below, and must properly account for their sales on an accrual basis in compliance with the system's fund accounting guidelines.

• The Electronic Fund Transfer Act, 15 USC §1693l-1 
• The Consumer Fraud and Deceptive Business Practices Act, 810 ILCS 505
• Electronic Fund Transfer Act, 205 ILCS 616
• Revised Uniform Unclaimed Property Act, 765 ILCS 1026

Other Considerations

Gift Cards/Certificates

Illinois State Consumer Fraud and Deceptive Business Practices Act requirements restricting fees and expirations of cards do not apply when those cards are:

1. Given as a gift from the unit's inventory directly to an individual as part of an awards, loyalty, or promotional program;
2. Sold below face value at a volume discount to nonprofit and charitable organizations for fundraising purposes or to employers to give as a gift, as long as the expiration date is not more than 30 days after the date of sale; or
3. Issued for a food product.

Stored Value Cards

Stored value cards have unique abandonment procedures under the Revised Uniform Unclaimed Property Act, as described in policy 21.3.2. “Stored value card” means a card, code, or other device that is:

1. Issued on a prepaid basis primarily for personal, family, or household purposes to a consumer in a specified amount, whether or not that amount may be increased or reloaded in exchange for payment;
2. Is redeemable upon presentation at multiple unaffiliated merchants for goods or services or usable at automated teller machines; and
3. Does not include gift cards, payrolls cards, loyalty cards, or game-related digital content.

Typically, the systen doesn’t issue these type of cards. Please contact Merchant Card Office, if issuance of this type of card is being contemplated.

Other Cards

Other Card is any card that does not meet the characteristics of gift cards/certificates or stored value cards and is usable only at a single merchant or an affiliated group of merchants.

An example of another card is a reloadable card which can be used only at various system pre-approved locations on or around campus. The card is refundable and an eligible user can request a refund.

Procedure

Follow the steps below for any sale of a gift card/certificate:

1. Plan ahead. Consult with Merchant Card Services at merchantcardhelp@uillinois.edu or 217-244-9384. They will help you comply with applicable laws and system procedures.

2. Consider offering only bank-issued cards. Email Merchant Card Services for a list of banks that issue stored value cards. Using bank cards can have the following benefits:

• No expiration date.
• The bank provides the required toll-free numbers for cardholder balance inquiries.
• The bank handles all state unclaimed property reporting regulations.

3. Merchant units that issue their own stored value cards or gift cards/certificate:

• Must provide a toll-free phone number that cardholders can call for balance inquiries. Print that number on the front or back of the card, and display it at the point of sale. For information on obtaining a toll-free number, contact:
  • Urbana - Technology Services, Long Distance Telephone Services
  • Chicago - ACCC Telecommunications Services
  • Springfield - Information Technology Services
  • Do not charge a post-purchase fee or any other fee on cards.
  • Do not charge sales tax when the cards are sold. Apply the sales tax when the card is used to make a purchase.

4. Cards with an expiration date must be valid for at least five years from the date they are issued or until presented for a purchase or service.

5. Do not accept P-cards as payment for stored value or gift cards or certificates.

6. All cards sold must be accounted for on an accrual basis and should be recorded as unearned revenue in the general ledger when the initial sale occurs (as opposed to recording the sale as revenue in the operating ledger). See below for how sales should be recorded:

• The initial sale of the card should be credited to the 61716, “Deferred Rev – Unredeemed Cards” account code in the Banner general ledger. For example, any cash/check/credit card payment you receive for the sale of a card would be deposited directly to this 61716 account code on the applicable deposit form or credit card terminal.

When the cards are eventually redeemed for goods or services by the customer, you would process a journal voucher to reduce (debit) the 61716 deferred revenue general ledger account code and to increase (credit) the applicable operating ledger revenue account code. This represents the goods/services the customer redeemed in exchange for the card.

Related Policies and Procedures

7.6 The University PCard
21.3.2 Report Expired and Unredeemed Gift Cards/Certificates
8 Payments and Reimbursements

Additional Resources

Federal Credit Card Accountability Responsibility and Disclosure Act of 2009
Illinois State Consumer Fraud and Deceptive Business Practices Act - 2008 Amendment

Last Updated: October 9, 2020 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 2008