N.Y. General Business Law § 396-i: Acceptance of unexpired gift certificates

§ 396-i. Acceptance of unexpired gift certificates. 1. (a) For the

purposes of this section, the following terms shall have the following

meanings:

(1) "gift certificate" shall mean a 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 (i) an electronic payment

device linked to a deposit account or which is covered by the exclusion

set forth in 15 U.S.C. § 1693 L-1(a)(2)(D)(ii), (ii) a fare payment card

or electronic payment device used to pay for travel on a public

transportation authority system, or (iii) 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.

§ 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 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.

1-a. No person, firm, partnership, association or corporation who or

which issues gift certificates or store credits, or who or which

conducts a "closing out sale" or "defunct business sale" as such terms

are defined in section five hundred eighty-one of this chapter, of the

merchandise of any such person, firm, partnership, association or

corporation, shall refuse to accept such gift certificate or store

credit in payment for goods or services used or bought for use primarily

for personal, family or household purposes, including, but not limited

to, goods or services advertised on sale or pursuant to a liquidation or

close-out, provided that if the certificates or the terms of the store

credits limit the period of time during which they may be used, they are

presented for redemption before the expiration of such period of time.

2. No person, firm, partnership, association or corporation who or

which issues gift certificates or store credits, or who or which

conducts a "closing out sale" or "defunct business sale" as such terms

are defined in section five hundred eighty-one of this chapter, shall in

any manner restrict the holder of a gift certificate or store credit

from electing use of such gift certificate or store credit in a manner

not inconsistent with stated terms of such gift certificate or store

credit, nor shall any person, firm, partnership, association or

corporation who or which issues gift certificates or store credits, or

who or which conducts a "closing out sale" or "defunct business sale" as

such terms are defined in section five hundred eighty-one of this

chapter, alter the term of a gift certificate or store credit after it

has been issued.

2-a. (a) The terms and conditions of a gift certificate shall be

disclosed to the purchaser:

(i) on a sign conspicuously posted stating "TERMS AND CONDITIONS ARE

APPLIED TO GIFT CERTIFICATES/GIFT CARDS"; or (ii) conspicuously stated

in an offer made by mail thus: "TERMS AND CONDITIONS ARE APPLIED TO GIFT

CERTIFICATES/GIFT CARDS".

(b) For purchases via electronic, computer, or telephonic means, the

statement "TERMS AND CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT

CARDS" shall be stated prior to the customer's purchase of the gift

certificate or conspicuously written within the electronic message

offering a gift certificate for purchase.

(c) All advertisements or promotions for gift certificates shall

include a notice in like or similar term to the following: "TERMS AND

CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT CARDS".

2-b. (a) No person, firm, partnership, association or corporation

shall sell a gift certificate to a purchaser unless the seller displays

a conspicuous notice at or near where the gift certificate is displayed

or at or near the physical location where the sale occurs, that (i)

cautions the purchaser about prepaid card scams, and (ii) instructs the

purchaser on what to do if they suspect they might be a potential victim

of such a scam.

(b) The consumer protection division, as established in section

ninety-four-a of the executive law, shall create a model notice which

sellers may use to comply with the requirements of this section and

shall make such notice accessible to sellers including, but not limited

to, posting such notice on the consumer protection division's website in

a format available for sellers to print and display.

3. The terms and conditions of a gift certificate store credit shall

be clearly and conspicuously stated thereon. Terms and conditions

including, but not limited to, policies related to refunds, warranties,

changes in terms and conditions, the expiration date, if any, the

activation fee, if any, 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.

3-a. The requirements of subdivisions two-a and three of this section

shall not apply to a gift certificate that has no terms and conditions.

3-b. Subparagraph (i) of paragraph (a) of subdivision two-a and

subdivision five-a of this section shall not apply to gift certificates:

(a) sold below face value or at a volume discount to employees, to

nonprofit and charitable organizations, or educational institutions for

fundraising purposes; or

(b) distributed to a consumer or employee pursuant to an awards,

rewards, loyalty, or promotional program without any consideration being

given in exchange for the gift certificate by the consumer or employee.

3-c. Nothing in this section shall be construed to prevent unclaimed

funds related to gift certificates from becoming abandoned under section

thirteen hundred fifteen of the abandoned property law.

4. Whenever there shall be a violation of this section, an application

may be made by the attorney general in the name of the people of the

state of New York to a court or justice having jurisdiction by a special

proceeding to issue an injunction, and upon notice to the defendant of

not less than five days, to enjoin and restrain the continuance of such

violations; and if it shall appear to the satisfaction of the court or

justice that the defendant has, in fact, violated this section, an

injunction may be issued by such court or justice, enjoining and

restraining any further violation, without requiring proof that any

person has, in fact, been injured or damaged thereby. In any such

proceeding, the court may make allowances to the attorney general as

provided in paragraph six of subdivision (a) of section eighty-three

hundred three of the civil practice law and rules and direct

restitution. Whenever the court shall determine that a violation of this

section has occurred, the court may impose a civil penalty of not more

than one thousand dollars for such violation. In connection with any

such application, the attorney general is authorized to take proof and

make a determination of the relevant facts and to issue subpoenas in

accordance with the civil practice law and rules.

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 fee, redemption fee, service 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 reasonably related to the cost of the issuer

issuing the open loop gift certificate and which shall in no event be in

excess of nine dollars.

(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.

(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.

5-a. It shall be unlawful for any person to sell or issue a gift

certificate other than a promotional gift certificate where the

underlying funds are subject to an expiration date, provided that a gift

certificate may be subject to an expiration date which is not earlier

than the later of nine years after the date on which the gift

certificate was issued, or the date on which funds were last loaded. The

terms of expiration of a gift certificate, if any, shall be clearly and

conspicuously stated on such gift certificate.

5-b. A gift certificate, other than an open loop gift certificate or a

promotional gift certificate, with a remaining value of less than five

dollars may be redeemed upon request for its cash value.

6. The provisions of this section shall be exclusive and shall preempt

any provisions of local law, ordinance or code, and no locality shall

impose requirements that are inconsistent with or more restrictive than

those set forth in this section.