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Bills Would Protect Consumers From Unfair Restrictions & Value Reductions
Monday, June 14, 2004
The New York State Senate today passed two bills that would protect consumers who purchase or receive gift cards from hidden fees, unfair restrictions and decreasing card values.
Bills sponsored by Senator Charles Fuschillo (R-C, Merrick) and Senator Dean Skelos (R-C, Rockville Centre) would require the disclosure of terms and conditions on gift certificates and gift cards at the time of purchase and would limit the ability of retailers to charge fees on gift cards and certificates. The bills have been agreed upon by the State Assembly.
"Too often consumers are faced with the situation where they have purchased a gift certificate or gift card and they are not aware of terms and limitations that may apply to the use of that gift certificate or gift card," Senate Majority Leader Joseph L. Bruno said. "Consumers often realize that they have purchased a gift certificate or gift card that expires or is subject to fees only when they attempt to redeem the certificate or card. These bills would increase disclosure and address concerns about unfair fees."
"Absent proper disclosure of the terms and conditions of gift cards or certificates, the consumer is left without the ability to redeem their certificate or card for the value that they believed it possessed," Senator Fuschillo, Chairman of the Senate Consumer Protection Committee said. "This legislation would require the disclosure of terms and conditions on gift certificates and gift cards at the time of purchase, enabling a consumer to make an informed decision as to whether or not they would like to purchase the gift certificate or gift card."
The legislation (S.6611A) would clarify that the definition for gift certificates includes gift cards. It would also require, at the time of purchase, the disclosure of any limitations placed on gift certificates by issuers, including expiration dates, any fees charged against the balance of the gift certificate, and whether a replacement gift certificate will be issued if the gift certificate is lost, stolen, or destroyed. The requirements do not apply to a gift certificate that has no terms and conditions.
The bill would require that terms and conditions of a gift certificate be disclosed on a conspicuously posted sign that states "TERMS AND CONDITIONS ARE APPLIED TO GIFT CERTIFICATE/GIFT CARDS SOLD HERE" and conspicuously printed on the gift certificate; or on an envelope or packaging containing the gift certificate or an additional printed document, provided a toll-free telephone number is printed on the gift certificate.
Companion legislation (S.6612B), sponsored by Senator Skelos, would prohibit the assessment of retroactive fees against gift certificates or gift cards. This legislation also prohibits the assessment of monthly service fees until the thirteenth month of dormancy.
"Industry figures indicate that 18 percent of the money spent on gift cards and gift certificates is not ultimately used," said Senator Skelos. "With the proliferation of e-commerce and the Internet's continued growth as a retail outlet, gift cards are gaining new popularity. I�m very pleased that the Senate and Assembly have reached agreement on this important consumer protection legislation because it will provide purchasers with full disclosure of any 'fine print' that makes these cards less desirable and stop sellers from including hidden fees that prevent buyers from receiving their money�s worth."
The prohibition on fees for the first year of dormancy can be extended for additional 12 month periods by the customer by making a purchase, or adding value to the card, because the account would no longer be "dormant."
The requirements included in both bills would not apply to gift certificates that are sold below face value at a volume discount to employees, to nonprofit and charitable organizations, or educational institutions for fundraising purposes; or distributed by the issuer to a consumer pursuant to awards, loyalty, or promotional programs.
The bills were sent to the Assembly.
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