Gift Card Consumer Protection Act
Summary: The Gift Card Consumer Protection Act prohibits gift card issuers from charging fees or designating expiration dates.
SECTION 1. SHORT TITLE
This Act shall be called the “Gift Card Consumer Protection Act.”
SECTION 2. FINDINGS AND PURPOSE
(A) FINDINGS—The legislature finds that:
1. While the use of gift cards is growing rapidly, consumers are often unaware of these cards’ fees and expiration dates.
2. By having use of funds without the payment of interest, gift card issuers already benefit from outstanding balances. Gift card issuers also benefit by knowing that outstanding balances will eventually be spent in their stores rather than elsewhere in the marketplace.
3. Fundamental fairness requires that customers be allowed to spend their gift card balances without unwarranted fees or expiration dates.
(B) PURPOSE—This law is enacted to ensure a fair marketplace by protecting the interests of the state’s consumers.
SECTION 3. GIFT CARD CONSUMER PROTECTION
(A) DEFINITION—In this section, “gift card” means a record evidencing a promise, made for monetary consideration, by a seller or issuer that goods or services will be provided to the owner of the record to the value shown in the record. A “gift card” includes, but is not limited to, a record that contains a microprocessor chip, magnetic strip or other storage medium that is pre-funded and for which the value is adjusted upon each use, a gift certificate, a stored-value card or certificate, a store card, or a prepaid long distance telephone service that is activated by a prepaid card that requires dialing an access number or an access code in addition to dialing the phone number to which the user of the prepaid card seeks to connect.
(B) PROHIBITIONS
1. Except as provided in paragraph 2, it shall be unlawful for any person or entity to:
a. charge any fee, including a maintenance, service or inactivity fee, on a gift card, or
b. place an expiration date or otherwise limit the time for the redemption of a gift card.
2. A gift card may contain an expiration date if that date is disclosed clearly and legibly on the gift card and the gift card was:
a. issued pursuant to an awards or loyalty program where no money or thing of value was given in exchange for the gift card, or
b. donated to a charitable organization without any money or other thing of value being given in exchange for the gift card.
3. A gift card shall not escheat to the state.
(C) ENFORCEMENT
Any person or entity that violates this section shall be punished by a fine of not more than $1,000 for each violation.
SECTION 4. EFFECTIVE DATE
This Act shall take effect on July 1, 2007 and apply to gift cards sold on or after July 1, 2007.