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Gift Card Restrictions
Retail Council position
Oppose legislation seeking to ban reasonable business terms and conditions to gift cards and/or gift certificates; oppose legislation seeking to ban expiration dates on such instruments; similarly oppose legislation that would require retailers to fund an escrow account in an amount equal to gift card sales; strongly oppose legislation that would require escheat to New York State of unused portions of gift card balances - even on gift cards that carry no expiration date.
Legislative action
The Retail Council opposes legislation that would unduly restrict retailers’ ability to sell gift cards. In 2009, those bills included: A.6956 (Ortiz), A.1541 (Reilly), A.7523 (Ortiz), A.5739 (Hayes). Each remained in their respective committees of origin at the close of the 2009 Legislative Session.
Introduced in 2008 was legislation supported by the Retail Council that would prohibit the sale of gift cards containing expiration dates and would remove gift cards from the provisions of New York’s Abandoned Property Law, among other provisions. S.7891 (Fuschillo)/ A.11034 (Pheffer) was held in the Senate Rules and Assembly Consumer Affairs Committees and has not yet been introduced in 2010.
At a glance
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Because the preponderance of retailer-issued gift cards carry neither fees nor expiration dates, the Retail Council supports New York’s statutes that require certain disclosures on any gift cards carrying terms and conditions (Chapters 170, 171 and 507, Laws of 2004).
- Legislation or ill-conceived budget proposals that attempt to define unclaimed gift cards as abandoned property - regardless of expiration date - will be met with staunch opposition from retailers, most notably those that offer gift cards without expiration date restrictions, fees or terms. Consumers, too, would be misinformed when purchasing an ‘unexpired gift card’ if unclaimed balances were forced to be re-directed inappropriately to the New York State treasury.
- Efforts to limit or prohibit outright such terms and conditions are based on the flawed assumption that ‘a gift card is the same as cash.’ When a consumer purchases a gift card, his or her cash is converted into a proprietary product for use in a specific location(s) in exchange for merchandise or service. Retailers and others offering gift cards are therefore prohibited from treating the product as if it were ‘the same as cash’ and must abide by certain bookkeeping standards and requirements. As a result, they may apply terms and conditions that should be appropriately disclosed to customers at the point-of-purchase.
- Behind the popular ease and convenience of the cards for consumers is a complicated and expensive web of technology and bookkeeping requirements which many retailers have absorbed entirely. Others have chosen to apply certain terms and conditions to the cards which they deem necessary within their own business models. Not all merchants apply such terms and conditions, however. Choices available to consumers today free the shopper from being forced to buy a gift card from a specific merchant.
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Electronic gift cards have become tremendously popular with consumers in retail stores, restaurants, shopping malls, and other service providers. A survey conducted by the National Retail Federation revealed that over 77 percent of consumers planned on purchasing a gift card during the 2009 holiday shopping season - a figure that typically increases annually as a growing number of consumers rely on the freedom and choice that accompanies a gift card product.
- Theft and fraud - including the Internet-based auctions of illegally purloined and activated gift cards - add new layers of costs for merchants and honest consumers alike.
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