The debit card, gift card and stored value industry has experienced tremendous growth in the last few years, in part because of the recent economic crisis. A growing segment of the population is turning to prepaid cards as an alternative to traditional bank accounts. In addition, more stores are resorting to promotional gift card offerings to attract business. However, with this growth comes increased state and federal regulatory scrutiny. Not only must providers contend with increased oversight with regard to consumer protection issues, they also face a renewed focus on banking regulations and anti-money laundering measures. Further, the current economic crisis has caused many states to struggle to fill dwindling coffers through creative means.
Authorities are increasingly targeting stored value vendors through the expansion and enforcement of state unclaimed property and escheat laws and the enlargement of traditional concepts of nexus for sales and income tax purposes.
In addition to The CommLaw Group’s regulatory and compliance services, through cross-pollination with our firm’s other practice groups, we offer clients valuable assistance in many facets of business development including interactions with consumers, distributors, and vendors.
State and Federal Regulatory Compliance Services
The CommLaw Group helps participants in the prepaid and stored value industry navigate the complex array of existing and pending statutes impacting their businesses. For example, our attorneys can offer the following:
- Advise clients regarding various state unclaimed property and escheat laws and assist in the creation of internal policies to minimize exposure and ensure compliance
- Counsel clients regarding existing and developing state sales and income tax requirements applicable to out of state and online vendors
- Assist entities qualifying as Money Services Businesses, pursuant to the Bank Secrecy Act, with compliance with applicable federal and state requirements, including registration and reporting obligations
- Advise financial institutions, Money Services Businesses, corporations and others on the legal requirements imposed under the Bank Secrecy Act, the PATRIOT Act, the Anti-Money Laundering Act and related acts and regulations
- Monitor existing and proposed FinCEN rules implementing Title III of the PATRIOT Act and the Bank Secrecy Act, such as “Know Your Consumer” due diligence requirements, and advise clients as to potential impacts to their businesses
- Assist clients in developing Anti-Money Laundering compliance programs
- Monitor developments in federal and state consumer protection laws, including the CARD Act, and inform clients about the impact of such measures on the prepaid and stored value industry
- Survey pending state and federal consumer protection legislation related to gift cards, prepaid cards, promotions, and gift certificates
Corporate and Operational Transactions
By virtue of The CommLaw Group’s experience in a wide range of industries, we can leverage our general corporate and transactional expertise and tailor this knowledge to best address the needs of specific industries. With regard to prepaid and stored value clients, our corporate and transactional services include:
- Negotiation and enforcement of vendor and consumer agreements
- Drafting and negotiation of asset purchase agreements, merger agreements and other transfers of control
- Creation of terms and conditions, terms of use, and privacy policies for online sales
- Assistance with planning, prosecution and implementation of intellectual property protection
- Restructuring and reorganization of corporate and partnership enterprises
- Drafting and negotiation of software, trademark and other intellectual property licenses
