Fees on prepaid cards seem illogical, but they are legal
Q. I have a complaint related to two Citizens Bank gift cards I received. My problems arose when Citizens canceled my gift cards before their expiration because they hadn’t been used for about a year. This caused the cards to be rejected when I did try to use them. After I finally got a live person on the phone, they said they would mail me a check for the balance on the cards, less monthly “service fees.’’
I wanted a refund on the service fee for the period when the cards were out of service. After all, who would pay their monthly fee for cable service for the months that the cable service had been canceled? They said that charging a service fee is their policy! How many businesses would get away with being that arrogant?
Frank O’Dette
Boston
A. This is another case of logic trumped by reality. Does it seem to make sense that you should be charged for something you can’t use? No. Will you be? Clearly, the answer is yes.
Normally, the admonition is buyer beware. But in this case, it’s recipient beware. Prepaid cards (these are not like gift cards you get for a store) have fees tied to them: Activation fees, maintenance fees, nonuse fees. That’s how sellers make money on them.
Citizens Bank isn’t apologetic about the situation, just matter-of-fact: That’s the way they work. Spokesman Mike Jones passed along the bank’s policy on these:
■ To protect customers from fraud, gift cards that are not used within six months of the purchase date are rendered inactive.
■ Customers who reactivate cards and use the remaining balance within one month will not be subject to fees.
■ Monthly service fees are assessed on cards that remain inactive for 12 months due to costs associated with maintaining them, including fraud monitoring.
■ The $2.50 monthly maintenance fee is assessed beginning in the 13th month after issuance.
Jones said he couldn’t specifically address this situation: “In order to ensure customer privacy, we don’t comment on individual customer relationships.’’
The bottom line is when you get one of these cards, read the terms so you’ll know when the fees will be charged. The best plan is to use them up quickly.
Mitch Lipka is the Consumer Ally for AOL’s WalletPop.com and lives in Worcester. He can be reached at ConsumerNews@Aol.com. 
