Members Only Content
NEWS & C·A·R·D ALERTS™
New York Introduces Legislation Against Gift Certificate Tampering that Includes Requiring Secure Packaging
Maryland Enacts Law Amending Its Consumer Protection Act to Combat Gift Card Fraud
Update: Delaware Enacts Legislation Requiring Fraud Disclosures Prior to Gift Card Purchase
Update: California SB 1272 Increasing the Mandatory Cash Amount for Gift Card is Dead
New Jersey Introduces Amendment Requiring Retailers to Display a Gift Card Fraud Notice
Regulatory Dictionary
- Library
- Regulatory Dictionary
Prepaid cards and instruments are encumbered heavily by regulations, rules and standards set by numerous jurisdictions and various governing boards. These rules have also caused the creation of many words and phrases commonly used in the industry. To understand these industry words and phrases, the Compliance Libraries provide this Regulatory Dictionary.
Words and Phrases: Click on emphasized terms within a definition for access to other definitions.
AML: This is an acronym for anti-money laundering. Money laundering is a phrase generally refers to illicit activity in moving money in conjunction with or furtherance of criminal or terrorist activities. Money laundering is regulated by a group of federal laws commonly referred to as Anti-Money Laundering Regulations. Prepaid Cards and Prepaid Access Devices, including Gift Cards, are subject to AML Regulations.
Anti-Money Laundering Regulations: The phrases Anti-Money Laundering Regulations collectively refers to a group of laws designed to regulate illicit money laundering in conjunction with or furtherance of criminal or terrorist activities. Primarily a subject of federal law, these regulations are rooted in the Bank Secrecy Act, the USA Patriot Act, and related federal regulations. Prepaid payment instruments, such as gift cards, are specifically addressed in the FinCEN Regulation. AML Regulations are administered by FinCEN, the OCC, and OFAC. Among other things, AML regulations require focus on KYC, CIP, OFAC, CTRs, the Closed Loop AML Exemption, the Open Loop AML Exemption, the One Thousand Dollar Rule, the Two Thousand Dollar Rule, and the Ten Thousand Dollar Rule.
AML Regulations: See Anti-Money Laundering Regulations.
Awards Card: This generally refers to a payment card designed to deliver awards granted to the cardholder usually as a part of a promotional campaign or incentive program. Among other rules, Awards Cards may be subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes. An Awards Card is sometimes referred to as a Rewards Card.
Back-End Fee: This refers to a fee charged against the balance of prepaid instrument such as a $2.00/per month fee assessed against the remaining balance of a gift card. Among other rules, Back End Fees are subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
Back-End Fee Regulation: This refers to the regulation of Back-End Fees by federal or state laws along with international counterparts. With respect to Prepaid Cards, Back-End Fees typically are regulated by Consumer Protection Laws and/or Unclaimed Property Statutes. In the Compliance Libraries, Back-End Fees are classified into four regulated categories: Banned, Not Banned, Conditionally Permitted, and/or Escheat Status Impacting.
Bank Secrecy Act: The Bank Secrecy Act, 31 U.S.C 5311, is one of several federal laws in the group of statutes and regulations commonly referred to as Anti-Money Laundering Regulations. Provisions of this act regulate Prepaid Cards and Prepaid Access Devices.
Banned: In the Compliance Libraries, this describes a Prepaid Card feature that is barred from use by law in a specific jurisdiction. Examples are Expiration Dates or Back-End Fees that are banned by a Consumer Protection Law or Unclaimed Property Statute. Banned is one of four categories of a Card feature regulation. The other three are Not Banned, Conditionally Permitted, and/or Escheat Status Impacting.
Breakage: Prepaid Cards and prepaid payment instruments usually represent a Future Performance Obligation held by the instrument issuer and owed to the Cardholder. In the world of accounting, future performance obligations typically are booked as liabilities on the balance sheet of the issuer. Overtime some instruments or cards, and their related liabilities, are not used and may become stale or abandoned. In accounting parlance, these stale or abandoned liabilities are known as Unexercised Customer Rights. In common language, they are known as Breakage. Breakage is subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, SEC Guidance, GAAP, and IFRS.
Card: This ordinarily refers to the standard plastic card used as a payment vehicle for Gift Cards, GPR Cards, LAP Cards, and the like. The term has also been used to refer to the virtual form of the plastic card which is not a physical card and is sometimes referred to as a Virtual Card. When value is prepaid or loaded on a Card before it is used, it is a Prepaid Card, Stored Value Card, or Prepaid Access Device. In certain statutes and regulations, the term Card, and variants thereof, are defined and the definitions vary depending upon the law or regulation. Among other rules, Cards are subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, and Anti-Money Laundering Regulations.
Card Act: This is an abbreviated name for a federal statute enacted in 2009 during the Obama Administration addressing both credit cards and gift cards. When initially introduced, the Act focused upon credit cards. The act was extended to gift cards by Senator Schumer via the Schumer Amendment. This Act became effective in 2010. The Act is a consumer protection statute and, as such, is among the Consumer Protection Laws regulating Cards. The Act can be found at 15 USC 1601. The Act authorized the promulgation of implementing federal regulations on Cards resulting in the adoption of the federal Card Act Regulations in 2012.
Card Act Regulations: This refers to federal regulations adopted in 2012 to implement the Card Act. These regulations address consumer protection issues regarding Cards. These regulations can be found at 12 CFR 205.20. The Card Act Regulations are among the Consumer Protection Laws regulating Cards. Initially administered by the Federal Reserve they are now handled by the CFPB.
Card Agreement: This generally refers to the agreement between the Card Issuer and the Cardholder. In most closed-loop retailer gift card programs the Card Agreement consists of terms and conditions placed on the Card Front and the Card Back. For bank-issued Cards, the Card Agreement is more elaborate and may include an insert accompanying the physical card. For Virtual Cards and instruments, the terms and conditions are commonly communicated online. Card Agreements are subject to a variety of regulations including Consumer Protection Laws.
Card Back: A standard plastic card, such as gift card, has a front and a back. The phrase Card Back refers to the back of the card. Terms and conditions are often placed on the Card Back. Card Backs are subject to regulation by Consumer Protection Laws. Card Backs for cards issued by banks are also subject to OCC Gift Card Guidance.
Card Front: A standard plastic card, such as gift card, has a front and a back. The phrase Card Front refers to the front of the card. Some terms and conditions are placed on the Card Front. Card Fronts re subject to regulation by Consumer Protection Laws. Card Fronts for cards issued by banks are also subject to OCC Gift Card Guidance.
Cardholder: This is a loose term referring the person or business that hold the Card for use as a payment instrument. A Cardholder can be a business or a consumer. In Gift Cards the original Cardholder is the purchaser with the gift recipient becoming the Cardholder upon delivery of the gift.
Cash Back: This is a loose industry phrase. For credit cards it often refers to cash back paid to the cardholder as a part of a loyalty or awards program. For Gift Cards and Stored Value Cards, it refers to the ability redeem the Card for cash instead of being required to purchase goods and services or it refers to the ability of the Cardholder to request cash back off a Card when the cards are used resulting in a remaining and often low balance. For Cards, cash back is regulated by Consumer Protection Laws, commonly known as Cash Back Regulations. Cash Back also impacts the application of Unclaimed Property Laws, Money Transmitter Laws, and Anti-Money Laundering Regulations.
Cash Back Regulations: This refers to a statute or regulation adopted by some states that require a retailer or restaurant to pay a Cardholder cash in the amount of the remaining balance of a Card, usually upon request of the Card user, when the Card is used and results in a balance below an amount specified in the regulation. Cash Back Regulations are Consumer Protection Laws, although in rare instances may also be in an Unclaimed Property Statute. They also impact the application of Unclaimed Property Laws, Money Transmitter Laws, and Anti-Money Laundering Regulations. . The regulation of Cash Back generally falls into three categories: Required, Not Required and Escheat Status Impacting.
CFPB: This is an acronym for the Consumer Financial Protection Bureau.
CFPB Escheat Guidance: This refers to guidance released by the CFPB requiring a Holder to keep Escheated cards active for use by Cardholders for five years in light of the restriction in the federal Card Act upon Expiration Dates.
CIP: This is an acronym for the Customer Identification Protocol.
CFR: This is an acronym for the Code of Federal Regulations.
Closed Loop Card: This generally refers to a Card that is usable by the Cardholder to purchase goods or services only from a single retailer or perhaps a group of affiliated outlets–such as the Home Depot gift card which is good only at Home Depot. Among other rules, Closed Loop Cards are regulated by Consumer Protection Laws, Unclaimed Property Statutes, and Anti-Money Laundering Regulations. The closed loop status of a Card may impact the application of these laws.
Closed Loop AML Exemption: The FinCEN Regulation establishes rigorous AML requirements for Cards including KYC policies and CIP. This regulation also contains exemptions that exclude certain Cards from these rigorous rules. One of these exemptions is for Closed Loop Cards that meet specified criteria. The phrase Closed Loop AML Exemption refers to that exemption. Two of several features of the Closed Loop AML Exemption are the Two Thousand Dollar Rule and the Ten Thousand Dollar Rule.
Code of Federal Regulations: Commonly known as the CFR, this is the code of the regulations promulgated by federal agencies and departments. These regulations are published in the Federal Register. Several federal regulations impacting Cards are in the CFR, including the Card Act Regulations, the Durbin Amendment Regulations, and the FinCEN Regulation.
Combined Proportionate and Remote Derecognition Method: This refers to a timing method usable to derecognize card liabilities when the Derecognition accounting technique is applied. Under the combined method, Cards are derecognized via the Proportionate Derecognition Method until point where the Remote Derecognition Method would otherwise apply, at which time the Remote Derecognition Method is used.
Conditional Escheat Exemption: This refers an Escheat Exemption that may or may not apply depending upon the existence of a specified condition. Common examples are Escheat Exemptions that do not apply if a Card has an Expiration Date, if a Card has Back-End Fees, and/or if a Card is designed to provide Cash Back. See also Impacted Escheat. Several types of Cards are subject to Conditional Escheat Exemptions under Unclaimed Property Statutes.
Conditionally Exempt: In the Compliance Libraries, this describes a type of Prepaid Card that is subject to a Conditional Escheat Exemption. Conditionally Exempt is one of three categories of Escheat Status. The other two are Exempt and Non-Exempt.
Conditionally Permitted: In the Compliance Libraries, this describes a Prepaid Card feature that is allowed in a jurisdiction if specified conditions are met. Examples are Expiration Dates that are permitted if certain disclosures are made or if specified timing requirements are met, or Back-End Fees that are permitted if certain disclosures are made or if specified timing requirements or amount limits are met. Conditionally Permitted is one of four categories of Card Feature regulation. The three others are Banned, Not Banned, and/or Escheat Status Impacting.
Consumer Disclosures: This generally refers to disclosures made to consumers regarding payment instruments and Cards regarding the instruments and their Terms and Conditions. Consumer Disclosures are regulated by Consumer Protection Laws and Unclaimed Property Statutes. Consumer Disclosures regarding some Gift Cards issued by federal banks are also subject of the OCC Gift Card Guidance.
Consumer Financial Protection Bureau: Commonly known as the CFPB, this is a federal agency charged with administering certain federal consumer protection regulations. The CFPB is charged with administering federal consumer protection regulations on financial products and services, including some Cards.
Consumer Protection Laws: This collectively refers to a group of laws enacted for the purpose of protecting consumers with respect to various business activities and practices. Cards are regulated by Consumer Protection Laws enacted by both the federal government and the states. The primary regulated subjects are Back End Fees, Front End Fees, Expiration Dates, Cash Back, Terms and Conditions, and Consumer Disclosures. Examples of Consumer Protection Laws at the federal level are the Card Act and the Card Act Regulations. Consumer Protection Laws have been administered by many agencies including the FTC, OCC, Federal Reserve, and CFPB at the federal level. They are often enforced by state Attorney Generals at the state level.
CTR: This is an acronym for Currency Transaction Report.
Customer Identification Protocol: Commonly known as CIP, this refers to a process of gathering required fields of Personally Identifiable Information about a customer and verifying the customer’s identity as a part of the KYC objectives of Anti-Money Laundering Regulations. The regulations require CIP for some payment instruments and Cards. The regulations also have exemptions for certain Cards including the Open Loop AML Exemption and Closed Loop AML Exemption specified in the FinCEN Regulation.
Derecognition: This refers to an accounting technique by which the liabilities underlying Unexercised Customer Rights or Breakage are debited with a credit to an income account. The use of Derecognition is subject to regulation by GAAP, IFRS, the SEC Guidance, and Unclaimed Property Statutes.
Dodd Frank Act: This refers to the Dodd Frank Wall Street Reform and Consumer Protection Act. It is a federal statute enacted in 2010 regulating financial institutions. The Durbin Amendment to the Dodd Frank Act regulates various forms of Cards.
Durbin Amendment: This refers to an amendment added by Senator Durbin to the Dodd Frank Act. The Durbin Amendment regulates various forms of Cards. It can be found at 15 USC 1693.o-2.
Durbin Amendment Regulations: This refers to the federal regulations adopted by the Federal Reserve to implement the Durbin Amendment.
Escheat: This has a technical meaning under certain laws. In more common parlance, the term refers to the process of transferring abandoned property to a U.S. state or a U.S. territory pursuant to a state or territorial statute known as an Unclaimed Property Statute. Escheat Laws regulate Cards along with the Unexercised Customer Rights and Breakage and require Holders of various Cards to escheat the items to a state or U.S. territory depending upon the nature of instrument or Card and the Unclaimed Property Statute.
Escheat Exemption: This refers to an exemption in an Escheat Law or Unclaimed Property Statute under which the Holder is not required to Escheat a specific type of Property to a U.S. state or U.S. territory. The exemption can take several forms including an express exclusion or exception, a restricted definition, or the removal of the item of Property from the Unclaimed Property Statute. Some Escheat Exemptions are Conditional Escheat Exemptions. Several types of Prepaid Cards are subject to Escheat Exemptions and either can be Exempt or Conditionally Exempt. See also Escheat Status.
Escheat Laws: This usually refers to Unclaimed Property Statutes, although the phrase can also refer to other legal methods by which abandoned property is required to be escheated to a U.S. state or U.S. territory. Escheat Laws regulate payment instruments and Cards along with Unexercised Customer Rights and Breakage. Escheat Laws require Holders of such instruments and Cards to escheat the items to a U.S. state or U.S. territory depending upon the nature of instrument or Card and the Unclaimed Property Statute. Escheat laws may have an Escheat Exemption and the exemption may be a Conditional Escheat Exemption.
Escheat Status: In the Compliance Libraries, this describes whether an Unclaimed Property Statute requires the Escheat of a Prepaid Card. Depending upon the type of Card, a Prepaid Card may have one of three types of Escheat status: Exempt, Non-Exempt, or Conditionally Exempt.
Escheat Status Impacting: In the Compliance Libraries, this describes certain Prepaid Card features such as Back-End Fees, Cash Back and/or Expiration Dates that may change the Escheat Status of a Card by triggering a Conditional Escheat Exemption. Escheat Status Impacting is one of four categories of Card feature regulations. The three others are Banned, Not Banned, and Conditionally Permitted.
Exempt: In the Compliance Libraries, this describes a type of Prepaid Card that is subject to an Escheat Exemption that is not a Conditional Escheat Exemption. Exempt is one of three categories of Escheat Status. The other two are Conditionally Exempt and Non-Exempt.
Expiration Date: This refers to a date on which a payment instrument or Card becomes unusable with the Cardholder losing access to the underlying account or value. Expiration Date should not be confused with Valid Thru Date which is a date on which a plastic card becomes unusable but the Cardholder retains the ability to access the underlying account or value by obtaining a new card or via a customer service transaction. Expiration Dates are regulated by Consumer Protection Laws and Unclaimed Property Statutes.
Expiration Date Regulation: This refers to the regulation of Expiration Dates by federal or state laws along with international counterparts. With respect to Prepaid Cards, Expiration Dates typically are regulated by Consumer Protection Laws and/or Unclaimed Property Statutes. In the Compliance Libraries, Expiration Dates are classified onto four regulated categories: Banned, Not Banned, Conditionally Permitted, and/or Escheat Status Impacting.
FASB: This is an acronym for the Financial Accounting Standards Board. The FASB is the governing board for GAAP.
Fed: This is an abbreviation for the Federal Reserve.
Federal Reserve: This is a federal agency. Among many other functions, the Federal Reserve is charged with administering regulations implementing the Dodd Frank Act. It also had authority for regulations arising out of the federal Card Act.
Financial Accounting Standards Board: Commonly known as FASB, this is the governing board for GAAP.
Financial Crimes Enforcement Network: This is a bureau of the U.S. Department of Treasury and is charged with administration of Anti-Money Laundering Regulations including the FinCEN Regulation, which focuses on Prepaid Cards and Prepaid Access Devices.
FinCEN: This is an acronym for the Financial Crimes Enforcement Network. FinCEN is a bureau of the U.S. Department of Treasury and is charged with administration of Anti-Money Laundering Regulations including the FinCEN Regulation which focuses upon Prepaid Cards and Prepaid Access Devices.
FinCEN Regulation: This refers to an AML regulation promulgated by the U.S. Department of Treasury and is the core Anti-Money Laundering Regulation governing Prepaid Cards and Prepaid Access Devices. The FinCEN Regulation is also known as the Prepaid Access Regulation. It can be found at 31 CFR 1010.100.
First Priority Rule: This refers to the first of three priority rules used to determine which U.S. state or U.S. territory has priority with respect to claiming Escheat of an item of unclaimed property pursuant to an Unclaimed Property Statute. The First Priority Rule is a rule of federal common law set by the U.S. Supreme Court. It has also been codified in various forms in some state Unclaimed Property Statutes. In the world of Cards, the rule generally focuses upon the state or territory of residence of the Cardholder if such Cardholder information is on the records of the card issuer – all subject to a variety of issues.
Front End Fee: This ordinarily refers to a fee charged to the consumer at the time a prepaid instrument or card is sold to the purchaser. Front End Fees are subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
FTC: This is an acronym for the Federal Trade Commission.
Future Performance Obligation: In contracts with customers, a business may owe an obligation to a customer to perform a duty in the future. This is an accounting phrase referring to such future obligations. When a cardholder prepays for a Card an obligation placed upon the instrument issuer to perform in the future. These Future Performance Obligations typically are booked as liabilities on the balance sheet of the instrument issuer. Overtime these liabilities may become stale or abandoned resulting in Unexercised Customer Rights and Breakage. Future Performance Obligations are subject to regulation by GAAP, IFRS, the SEC Guidance, and Unclaimed Property Statutes.
GAAP: This is an acronym for Generally Accepted Accounting Principles. The governing board for GAAP is the FASB.
Gift Card: A Gift Card generally is a Card that is redeemable only for goods and services and typically marketed as gifts for purchasers to deliver to gift recipients. Gift Cards may be Open Loop Cards, Closed Loop Cards, Partially Open Loop Cards, or variants thereof. In some statutes and regulations, the term Gift Card is a defined term and these definitions vary. Among other rules, Gift Cards are subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, Privacy Laws, and Anti-Money Laundering Regulations.
General Purpose Reloadable Card: Commonly known as a GPR Card, this is a card that is reloadable and redeemable at all merchants that accept Visa or MasterCard and usable at ATMs to access cash, much like a debit card. The phrase is a defined term of art in various federal regulations governing Cards. Among other rules and standards, General Purpose Reloadable Cards are subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, Money Transmitter Laws, Privacy Laws, and Anti-Money Laundering Regulations.
Generally Accepted Accounting Principles: Commonly known as GAAP, this refers to accounting standards adopted by the FASB. Certain standards specified in GAAP address accounting for Prepaid Cards and for Derecognition.
GPR Card: A GPR Card is a General Purpose Reloadable Card.
Holder: This is a term of art under Escheat Laws and Unclaimed Property Statutes. It generally refers to the company that holds an item of abandoned property and is required to Escheat the property to a U.S. state or U.S. territory pursuant to an Unclaimed Property Statute.
IASB: This is an acronym for the International Accounting Standards Board. The IASB is the governing board for IFRS.
IFRS: This is an acronym for International Financial Reporting Standards. The governing board for IFRS is the IASB
Incentive Card: This generally refers to a payment card designed to deliver awards granted to the cardholder, usually as a part of a promotional campaign or incentive program designed to incent conduct by the Cardholder. Among other rules, Incentive Cards may be subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
Internal Revenue Service: Commonly know as IRS, this is a federal agency charged with administration of the federal income tax laws. The IRS has set specific rules regarding the income taxation of certain gift cards.
International Financial Reporting Standards: Commonly known as IFRS, this refers to accounting standards adopted by the IASB governing international companies. Certain standards in IFRS address accounting for Prepaid Cards and for Derecognition. The governing board for IFRS is the IASB.
IRS: This is an acronym for Internal Revenue Service. The IRS is a federal agency whose jurisdiction charged with administration of the federal income tax laws.
Know Your Customer: Commonly known as KYC, this is a term of art in the world of Anti-Money Laundering. AML Regulations are premised upon the concept that if a bank or card issuer knows its customer illicit money laundering will be deterred, discovered or stopped. Payment instrument including Cards are subject to KYC based regulations.
KYC: This is an acronym for Know Your Customer.
LAP: This acronym generally refers to loyalty, awards, and promotion.
LAP Cards: These typically include Awards Cards, Rewards Cards, Incentive Cards, Loyalty Cards, and Promotional Cards. Among other rules, LAP Cards may be subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
Loyalty Card: This generally refers to a payment card designed to deliver awards granted to the cardholder usually as a part of a promotional campaign or incentive program designed to reward activity indicating loyalty by the cardholder to a company, program or transaction. Among other rules, Loyalty Cards may be subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
Money Transmitter: This refers to a company designated as such under a state Money Transmitter Law.
Money Transmitter Law: This generally refers to a state law that requires and regulates the issuance of money transmitter licenses to Money Transmitters. Depending upon the instrument and state, a Money Transmitter Law may regulate payment instruments and some Cards.
Multiple Retailer Exemption: This is a loose phrase referring to the exemptions in Consumer Protection Laws, Money Transmitter Laws, Unclaimed Property Statutes and AML Regulations for Cards usable at multiple retailers. Under these regulatory exemptions, cards redeemable at multiple retailers may be treated different from other forms of cards.
Multiple Unaffiliated Retailer Exemption: This is a loose phrase referring a Multiple Retailer Exemption that is limited to unaffiliated retailers.
None Required: In the Compliance Libraries, this describes whether any disclosures of certain matters are required in the Terms and Conditions. None required is one of three categories of regulatory action. The other two are Required and Not Required.
Non-Exempt: In the Compliance Libraries, this describes a type of Prepaid Card that is not subject to an Escheat Exemption and, therefore, is subject to Escheat. Non-Exempt is one of three categories of Escheat Status. The other two are Conditionally Exempt and Exempt.
Not Banned: In the Compliance Libraries, this describes a Prepaid Card feature that is not expressly barred from use by a law or regulation. Examples are Expiration Dates or Back-End Fees that are not expressly banned in some jurisdictions by laws including a Consumer Protection Law or Unclaimed Property Statute. Not Banned should not be confused with Conditionally Permitted where the Card feature is permitted if certain conditions are met. Not Banned is one of four categories of Card feature regulations. The other three are Banned, Conditionally Permitted, and/or Escheat Status Impacting.
Not Required: In the Compliance Libraries, this describes whether a regulatory action need not be performed under a law or regulation. With respect to Cash Back Regulations it describes if Cash Back is not regulatorily required. Not required is one of three categories of regulatory action. The other two are Required and None Required.
OCC: This is an acronym for Office of Comptroller of the Currency.
Office of Comptroller of the Currency: Commonly known as OCC, this is a federal agency charged with administration of federal banking regulations governing federally charted banks. Among its other duties, the OCC regulates payment instruments and Cards issued by these banks. Included in their regulations is the OCC Gift Card Guidance which provides the agency view regarding disclosure of Terms and Conditions and other information regarding gift cards issued by federal banks. The OCC also enforces AML Regulations.
OCC Gift Card Guidance: This is a guidance released by the OCC governing the disclosure of Terms and Conditions and other information regarding Gift Cards issued by federal banks.
OFAC: This is an acronym for the Office of Foreign Assets Control.
Office of Foreign Assets Control: Commonly known as OFAC, this regulates transactions by U.S. companies in prohibited countries and transactions by U.S. companies with prohibited companies and persons. It publishes a list of prohibited companies and persons. Regulated companies are required to check their customers and activities against the OFAC list. Certain payment instruments and Cards are subject to these rules and regulations.
One Thousand Dollar Rule: This refers to the requirement in the Open Loop AML Exemption of the FinCEN Regulation that the value on Prepaid Access Devices not exceed $1,000 in any 24 hour period.
One Year Tax Deferral: This refers to a one-year deferral of federal income tax recognition applicable to some Cards.
Open Loop AML Exemption: The FinCEN Regulation establishes rigorous AML requirements for Cards including KYC protocols and CIP. This regulation also specifies exemptions that exclude certain Cards from these rigorous rules. One of these exemptions is for Open Loop Cards that meet specific criteria specified in the regulation. The phrase Open Loop AML Exemption refers to that exemption. Two of the many features of the Open Loop AML Exemption are the One Thousand Dollar Rule and the Ten Thousand Dollar Rule.
Open Loop Card: This refers generally to a Card that is usable by the cardholder to buy goods and services at all merchants who accept the cards issued by a bankcard network such as the Visa, MasterCard, American Express and Discover networks. Among other rules, Open Loop Cards are regulated by Consumer Protection Laws, Unclaimed Property Statutes, Money Transmitter Laws, Privacy Laws, and AML Regulations, and the open loop status of a Card may impact the application of these laws.
Partially Open Loop Card: This refers generally to a Card that is usable by the cardholder to buy goods and services at a restricted number of merchants who accept Visa or MasterCard. These cards are also known as Selected Authorization Cards and/or RAN Cards. Among other rules, Partially Open Loop Cards are regulated by Consumer Protection Laws, Unclaimed Property Statutes, Money Transmitter Laws, Privacy Laws, and Anti-Money Laundering Regulations, and the partially open loop status of a Card can impact the application of these laws.
Personally Identifiable Information: This generally refers to information about a cardholder that identifies the cardholder such as name, addresses, birth dates and Social Security numbers and the like. The collection of Personally Identifiable Information is subject to regulation by or impacts Unclaimed Property Statutes, AML Regulations, and Privacy Laws.
Prepaid Access Device: This is a term of art under the FinCEN Regulation and defines the types of prepaid instruments and Cards subject to the federal regulation. Prepaid Access Devices are subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, Money Transmitter Laws, Privacy Laws, and AML Regulations.
Prepaid Access Provider: This is a term of art under the FinCEN Regulation and defines certain companies that are subject to the regulation.
Prepaid Access Regulation: This refers to an AML regulation that is the core Anti-Money Laundering Regulation governing Prepaid Cards and Prepaid Access Devices. The Prepaid Access Regulation is also known in the card industry as the FinCEN Regulation.
Prepaid Access Seller: This is a term of art under the FinCEN Regulation and defines certain companies that are subject to the regulation.
Prepaid Card: This refers generally to a Card purchased by a cardholder for cash paid in advance of the card’s future use. It is also known as a Stored-Value Card and can be Prepaid Access Device. Prepaid Cards are subject to regulation by Consumer Protection Laws, Unclaimed Property Statutes, Money Transmitter Laws, Privacy Laws, and AML Regulations.
Priority Rules: This refers to a set of priority rules used to determine which U.S. state or U.S. territory has priority with respect to claiming Escheat of an item of unclaimed property per an Unclaimed Property Statute. Three priority rules are commonly noted: the First Priority Rule, the Second Priority Rule, and the Third Priority Rule.
Privacy Laws: This collectively refers to a set of laws regulating the privacy of information regarding Cards including Personally Identifiable Information. Privacy Laws impacting Cards have been enacted by U.S. federal government. By some states and by several other countries.
Promotional Card: This refers generally to a payment card designed for delivery to a cardholder to promote a company, an event, or an activity. Among other rules, Promotional Cards may be subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
Property: This is a term of art under Escheat Laws and Unclaimed Property Statutes. It refers to the items that are subject to escheat by a Holder to a U.S. state or U.S. territory. Depending upon the Escheat Law, Prepaid Cards may be a type of Property subject to Escheat.
Proportionate Derecognition Method: This refers to a timing method usable under GAAP to derecognize card liabilities when the Derecognition accounting technique is applied.
RAN: This is an acronym for the restricted access network used for a Restricted Access Card.
Restricted Access Network: Commonly known as RAN, this is the network used for a Restricted Access Card.
Remote Derecognition Method: This refers to a timing method usable under GAAP to derecognize card liabilities when the Derecognition accounting technique is applied.
Required: In the Compliance Libraries, this describes whether a regulatory action must be performed under a law or regulation. With respect to Cash Back Regulations it describes if Cash Back is regulatorily required. With respect to disclosures, it describes if the disclosure of a matter is required in the Terms and Conditions. Required is one of three categories of regulatory action. The other two are Not Required and None Required.
Restricted Access Card: This is a Card that is usable only at a restricted number of merchants such as a gift card that is good only at the unaffiliated stores of shopping center. These cards are also known as Selected Authorization Cards and/or Partially Open Loop Cards.
Rewards Card: This refers generally to a payment card designed to deliver awards granted to the cardholder usually as a part of a promotional campaign or incentive program. It is sometimes referred to as an Awards Card. Among other rules, Rewards Cards may be subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
SEC: This is an acronym for the Securities and Exchange Commission.
SEC Guidance: This refers to a written guidance issued by the SEC in 2005 regarding use of techniques to address accounting for stale liabilities and Breakage on Gift Cards.
Selected Authorization Card: This is a Card that is usable only at a restricted number of merchants or retail outlets such as a gift card that is good only at the unaffiliated stores of shopping center. These cards are also known as Partially Open Loop Cards and/or RAN Cards.
Second Priority Rule: This refers to the second of three priority rules used to determine which U.S. state or U.S. territory has priority with respect to claiming Escheat of an item of unclaimed property per an Unclaimed Property Statute. The Second Priority Rule is a rule of federal common law set by the U.S. Supreme Court. It has also been codified in various forms in some state Unclaimed Property Statutes. In the world of Cards, the rule generally focuses upon the state or territory of domicile of the card issuer in situations where the first priority does not apply – all subject to a variety of issues.
Securities and Exchange Commission: Commonly known as SEC, is a federal agency charged with administering the Security and Exchange Act. The SEC issued the SEC Guidance regarding use of techniques to address stale liabilities and Breakage on Gift Cards.
Schumer Amendment: This refers to an amendment added by Senator Schumer to the Card Act. The Schumer Amendment is a Consumer Protection Law that regulates gift cards.
Stored-Value Card: This is another phrase for a Prepaid Card. It is derived from the concept that, when a card is prepaid, value is placed and thus stored on the card. It can also be a Prepaid Access Device.
Sweep Derecognition Method: This refers to a timing method usable under GAAP and IFRS to derecognize card liabilities when Card Portfolios are transferred by period sweeps with corresponding Derecognition.
Ten Thousand Dollar Rule: This refers to the requirement in the Closed Loop AML Exemption and the Open Loop AML Exemption of the FinCEN Regulation that the aggregate purchases of Prepaid Access Devices by any one purchaser not exceed $10,000 in any 24 hour period.
Terms and Conditions: This generally refers to the terms and conditions governing the purchase and use of a payment instrument or Card. The Terms and Conditions typically comprise or are stated in the Card Agreement. Among other rules, Terms and conditions are subject to regulation by Consumer Protection Laws and Unclaimed Property Statutes.
Third Priority Rule: This refers to the third of three priority rules used to determine which U.S. state or U.S. territory has priority with respect to claiming Escheat of an item of unclaimed property per an Unclaimed Property Statute. The Third Priority Rule is not a rule of federal common law set by the U.S. Supreme Court. It is a rule created in some state Unclaimed Property Statutes and viewed by many practitioners as being unenforceable or unconstitutional. In the world of Cards, the Third Priority Rule generally focuses upon the state or territory where the transaction giving rise the card occurred, such as the state where a plastic card was sold in a retail store. It is some times referred to as the Transaction State Rule or the State Sold Rule.
Two Thousand Dollar Rule: This refers to the requirement in the Closed Loop AML Exemption of the FinCEN Regulation that the value on Prepaid Access Devices not exceed $2,000 in any 24-hour period.
Two Year Tax Deferral: This refers to a two-year deferral of federal income tax recognition applicable to some Cards.
Unexercised Customer Rights: A business may owe a Future Performance Obligation to a customer. Future Performance Obligations result in a corresponding right held by the customer to performance of the future obligation. The phrase Unexercised Customer Rights is an accounting phrase referring to such rights that have not been exercised by the customer. Over time, these rights may become stale or abandoned resulting in Breakage. Among other rules, Unexercised Customer Rights are subject to regulation by the GAAP, the IFRS, the SEC Guidance, and Unclaimed Property Statutes.
Unclaimed Property: This is a term used with respect to Escheat Laws to refer to presumed abandoned property that is subject to Escheat to a U.S. state or U.S. territory pursuant to Unclaimed Property Statutes. Payment instruments and Cards may become Unclaimed Property.
Unclaimed Property Statute: This refers to a U.S. state or U.S. territorial statute requiring the Escheat of items of presumed abandoned property to the state or territory. Payment instruments and Cards may be subject to regulation by Unclaimed Property Statutes. See also Escheat Laws.
United States Code: Commonly known as the USC, this refers to the code of federal statutes enacted by the U.S. Congress. It is published and maintained by the U.S. House of Representatives. The USC contains several laws regulating prepaid instruments and Cards including the laws enacted via the Bank Secrecy Act, the Patriot Act, the Card Act, the Dodd Frank Act, the Durbin Amendment, the Internal Revenue Code, and the Schumer Amendment.
USA Patriot Act: The Patriot Act was passed in 2001 after the 911 terrorist event and is one of several federal laws in the group of regulations commonly referred to as Anti-Money Laundering Regulations. The Act created the KYC based requirements including CIP.
USC: This is an acronym for the United States Code.
Valid Thru Date: This ordinarily refers to a date on which a plastic Card is disabled and becomes unusable by the cardholder but with the cardholder retaining the ability to access the underlying account or value by obtaining a new card or via a customer service transaction. Valid Thru Date should not be confused with Expiration Date, which is a date on which a Card becomes unusable with the cardholder losing the ability to access the underlying account or value. Among other rules, Valid Thru Dates are regulated by Consumer Protection Laws and proper use requires understanding of Unclaimed Property Statutes.
Virtual Card: This is a loose term that refers to a code that operates like a physical plastic card without the need for the physical plastic. Virtual Cards operate online where a physical plastic card may not be needed. Virtual Cards are subject to regulations similar too physical Cards.