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This bill would amend the general business law to modify conditions applicable to gift cards and gift certificates, such as dormancy fees and expiration dates. For example, it would limit the assessment of fees with respect to gift cards or gift certificates held by their customers prior to the twenty-fifth month of dormancy.
Gift certificates are defined in section 396-i of the general business law as “a written promise or electronic payment device …(i) usable at a single merchant or an affiliated group of merchants that share the same name, mark, or logo, or is usable at multiple, unaffiliated merchants or service providers; and (ii) is issued in a specified amount; and (iii) may or may not be increased in value or reloaded; and (iv) is purchased and/or loaded on a prepaid basis for the future purchase or delivery of any goods or services; and (v) is honored upon presentation.”
With increasing popularity, many retail businesses and credit card companies offer gift cards to give consumers another choice for how they choose to purchase products. This is especially true for consumers who do not have traditional bank accounts and choose to use these types of payment options instead.
In 2009, Congress enacted the Credit Card Accountability Responsibility and Disclosure Act that prohibits any dormancy or inactivity services fees prior to one year of dormancy. The law also requires disclosures of fees have been made, and no more than one fee is charged per month. The expiration date of at least five years and the terms of expiration must be conspicuously stated.
This legislation incorporates the disclosure provisions of the federal law and also expands the rights of consumers by extending the dormancy period from one year to two years before a service fee can be assessed. Also, there are also additional protections for the cardholder whereby the fees will be waived and the card returned to its full value if used within three years of issuance.
The Business Council believes this is a fair approach to providing not only protections for the consumer but also for the businesses who do incur costs for both the production and maintenance of these types of cards. The Business Council supports passage of S.4771-E(Funke) /A.7610-E (Dinowitz).