What's happening
This bill prohibits most fees and expiration dates on gift cards in New York, except for limited activation fees on open loop cards.
Why it matters
Consumers will be protected from most fees on gift cards. , including hidden or recurring charges like dormancy, service, or administrative fees, making the full value of gift cards more predictable and accessible over time.
Gift cards (other than certain promotional or open loop cards) can no longer expire. , ensuring that consumers can use their purchased value indefinitely and are not pressured to redeem cards quickly or risk losing funds.
Open loop gift cards (usable at multiple, unaffiliated merchants) can only have a limited, upfront activation fee. (capped at $4 or 5% of the card’s value), which addresses a common industry practice while still preventing ongoing or surprise deductions.
Consumers with small remaining balances (under $5) on most gift cards will have the right to redeem them for cash. , helping people avoid the frustration of “trapped” funds that are hard to spend and reducing waste.
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Who cares
Headline styles
Limit Gift Card Fees
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to consumer affairs and protection
- Delivered to assembly
- Passed senateVote 59–1
- Ordered to third reading cal.961
- Reported and committed to rules
- Committee discharged and committed to consumer protection
- Referred to rules
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8780
IN SENATE
July 15, 2020
Introduced by Sen. MAYER -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT to amend the general business law, in relation to fees for gift cards
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivisions 1, 3, 5, and 5-a of section 396-i of the general business law, subdivision 1 as amended by chapter 170 of the laws of 2004 and subdivisions 3 and 5 as amended and subdivision 5-a as added by chapter 329 of the laws of 2016, are amended and a new subdivision 5-b is added to read as follows:
1. (a) For the purposes of this section, the following terms shall have the following meanings:
(1) "gift certificate" shall mean a [written promise or electronic payment device] certificate, electronic card, or other pre-funded record that: (i) is 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[.];
(2) "open loop gift certificate" shall mean a gift certificate redeemable at multiple, unaffiliated merchants or service providers; and
(3) "promotional gift certificate" shall mean a gift certificate issued for no consideration which includes on the front of the gift certificate (i) a statement indicating that the card is issued for promotional purposes and (ii) the expiration date for the underlying funds.
(b) Gift certificate shall not include an electronic payment device linked to a deposit account, or prepaid telephone calling cards regulated under section ninety-two-f of the public service law. Gift certificate also shall not include flexible spending arrangements as defined in Section 106(c)(2) of the Internal Revenue Code, 26 U.S.C. §
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16939-02-0
S. 8780 2
106(c)(2); flexible spending accounts subject to Section 125 of the Internal Revenue Code, 26 U.S.C. § 125; Archer MSAs as defined in Section 220(d) of the Internal Revenue Code, 26 U.S.C. § 220(d); dependent care reimbursement accounts subject to Section 129 of the Internal Revenue Code, 26 U.S.C. § 129; health savings accounts subject to Section 223(d) of the Internal Revenue Code, 26 U.S.C. § 223(d), as amended by Section 1201 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173; or similar accounts from which, under the Internal Revenue Code and its implementing regulations, individuals may pay medical expenses, health care expenses, dependent care expenses, or similar expenses on a pretax basis. Gift certificate also shall not include a prepaid discount card or program used to purchase identified goods or services at a price or percentage below the normal and customary price; provided that [the] any expiration date of the prepaid discount card or program is clearly and conspicuously disclosed. Gift certificate also shall not include payroll cards or other electronic payment devices which are linked to a deposit account and which are given in exchange for goods or services rendered.
3. The terms and conditions of a gift certificate store credit shall be clearly and conspicuously stated thereon. Terms [and conditions shall include the expiration date, whether any fees are assessed against the balance of the gift certificate, and whether a fee will be charged for the replacement of a gift certificate that is lost, stolen, or destroyed, if any. Additional terms] and conditions including, but not limited to, policies related to refunds, warranties, changes in terms and conditions, the procedure for the replacement of a gift certificate, if any, assignment and waiver shall be conspicuously printed: (a) on the gift certificate; or (b) on an envelope or packaging containing the gift certificate, provided that a toll free telephone number to access the additional terms and conditions is printed on the gift certificate; or (c) on an accompanying document, provided that a toll free telephone number to access the additional terms and conditions is printed on the gift certificate.
5. (a) No person, firm, partnership, association or corporation shall charge or assess, or sell or issue any gift certificate subject to, any activation fee, retroactive [fees shall be assessed against a gift certificate.
(b) No monthly] fee, redemption fee, service [fees may be assessed against the balance of a gift certificate prior to the twenty-fifth month of dormancy] fee, dormancy fee, latency fee, administrative fee, handling fee, access fee, periodic fee, renewal fee, re-loading fee, or any other fee of any kind, other than an open loop gift certificate subject to an initial one-time activation or issuance fee not in excess of the lesser of four dollars or five percent of the face value of such open loop gift certificate.
[(c) A service fee may be assessed after the twenty-fourth month of dormancy provided that any such fee shall be waived and the gift certificate replenished to its value prior to such fees being assessed where the holder of such gift certificate presents the certificate within three years of issue] (b) No person, firm, partnership, association or corporation shall sell a gift certificate that has a face value or balance that declines as a result of the passage of time or the dormancy of the gift certificate.
[(d)] (c) For the purposes of this subdivision, "dormancy" shall mean non-use of a gift certificate. Use of a gift certificate shall include, but not be limited to, adding value, or purchases.
S. 8780 3
5-a. It shall be unlawful for any person to sell or issue a gift certificate other than a promotional gift certificate where the gift certificate or the underlying funds are subject to an expiration date [which is earlier than five years after the date on which the gift certificate was issued, or the date on which funds were last loaded to a store gift card. The terms of expiration shall be clearly and conspicuously stated on the gift certificate]. The terms of expiration of a promotional gift certificate, if any, shall be clearly and conspicuously stated on such promotional gift certificate.
5-b. A gift certificate, other than an open loop gift certificate, with a remaining value of less than five dollars may be redeemed upon request for its cash value.
§ 2. This act shall take effect one year after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to fees for gift cards
Purpose or general idea of bill
To prohibit fees and expiration dates on gift cards and gift certif- icates and to provide that gift cards and gift certificates may be redeemed in cash when the remaining value is less than five dollars.
Summary of provisions
Section 1 amends subdivision 1, 3, 5 and 5-a of section 396-i of the general business law and adds a new section 5-b to make clear that the definition of "gift certificate" includes gift cards, remove references to expiration date and fees, to prohibit the issuance of gift certif- icates and gift cards that decline in value over time, to prohibit the issuance of gift cards and gift certificates with expiration dates, and to provide that gift certificates and gift cards with a remaining value of less than five dollars may be redeemed for cash.
Section 2 sets an effective date of January 1, 2020.
Justification
Many gift cards are sold with a variety of fees attached that can significantly reduce their value. These include, but are not limited to, activation fees paid at the time of purchase and dormancy fees for fail- ing to use a gift card for a certain period of time. The Federal Credit CARD Act of 2009 placed some restrictions on gift card fees by prohibit- ing dormancy fees unless a gift card is dormant for at least twelve months and by limiting the frequency of periodic fees to no more than once a month. The CARD Act also prohibits expiration dates prior to five years after issuance.
However, permitted fees on gift cards can still be substantial. Most states have enacted laws to protect consumers by further limiting such fees. New York lags behind other states in addressing this issue. This bill protects consumers from excessive fees on gift cards by prohibiting all fees on gift cards and prohibiting gift cards that decline in value over time. In addition, to further eliminate loss of value to consumers, this bill prohibits expiration dates on gift cards and gift certificates and allows for redemption when the remaining balance is less than five dollars.
Prior legislative history
None.
Fiscal implications
None.
Effective date
This act shall take effect one year after it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.