Restricts fees on gift cards and gift certificates

Title of bill

An act to amend the general business law, in relation to restricting fees on gift cards and gift certificates

Purpose or general idea of bill

To restrict fees on gift cards and gift certificates

Summary of specific provisions

Section one - amends the general business law to restrict the ability for fees to be assessed on gift cards or gift certificates sold in New York state prior to the twenty-fifth month of dormancy. Provisions include:

5 (a) Allows for no retroactive fees

(b) No monthly service fees assessed prior to the twenty-fifth month of dormancy

(c) Allows a fee to be assessed after the twenty-fourth month of dormancy, however if a holder presents the certificate within three years of issuance, fees shall be waived and the certificate replenished

(d) Defines "dormancy" 5-a addresses expiration

5-a Provides that no gift certificate where the underlying funds are subject to an expiration date, shall expire earlier than five years after the date on which it was issued.

Section two provides exemptions for promotional gift certificates

Section three sets forth the effective date

Justification

Current New York State law requires notice of expiration dates as well as any fees that will be charged along with other terms and conditions that must be clearly and conspicuously stated on the card, package, or accompanying printed document. Fees are currently not allowed to be assessed prior to the thirteenth month of dormancy, but New York State does not specify how much of a fee can be assessed. Consumers purchase gift cards just like other products sold that have no fees assessed after the initial purchase. Businesses that sell gift cards have made the profit of selling it, and while they may incur a fee to track and maintain information on certificates sold, a consumer should not have to worry about losing the initial amount before having ample opportunity to spend the value. Twenty other states have passed legislation addressing the issue of fees on gift cards and certificates, with some only allowing a fee at the time of purchase. Consumers purchasing gift certificates should be protected and ensured the right to the services promised on the certificate within a reasonable amount of time. This bill would address consumer concerns while still providing flexibility for our small businesses.

Prior legislative history

New Bill

Fiscal implications

None

Effective date

This act shall take effect on the ninetieth day after it shall have become law and shall apply to gift certificates issued on or after such date.