N.Y. Personal Property Law § 402-a: Merchandise certificates and obligations therefor

§ 402A. Merchandise certificates and obligations therefor. 1. A

retail seller may issue merchandise certificates to a retail buyer, to

be paid for in instalments and to be used solely in exchange for goods

and services with a cash sale price in the face amount of such

certificates and not redeemable in cash, pursuant to a document executed

by the parties as hereinafter provided, which document, notwithstanding

the definition of obligations contained in subdivision seven of section

four hundred one, shall constitute a retail instalment obligation for

the purpose of this article, shall contain the entire agreement of the

parties, and shall be subject to all of the provisions of sections four

hundred three to four hundred twelve, inclusive, except the provisions

of the second sentence of section four hundred five.

2. On each issue of merchandise certificates, the document evidencing

the obligation therefor shall set forth a legend as provided in

paragraph (a) of subdivision two of section four hundred two, a notice

to the buyer as provided in paragraph (b) of subdivision two of section

four hundred two, the names of the seller and the buyer, the residence

or place of business of the buyer as specified by the buyer, the face

amount of the merchandise certificates issued, and all items required to

be disclosed by the act of congress entitled "Truth in Lending Act" and

the regulations thereunder, as such act and regulations may from time to

time be amended.

3. A seller may, in such a document, contract for and, if so

contracted for charge, receive and collect a credit service charge at

rates not exceeding those provided under section four hundred four of

this article. Such credit service charge shall be computed on the face

amount of merchandise certificates issued to the buyer, less

down-payment, if any.

4. The buyer shall have the right to return to the seller at any time

all merchandise certificates which have not been exchanged for goods and

services, and the seller shall thereupon credit the buyer with the full

face amount of such unused merchandise certificates returned and the

amount of the pro rata credit service charge thereon, which shall be

computed as of the date of issuance of the merchandise certificates so

returned. Where the amount of the refund of such credit charge is less

than one dollar no refund need be made.

5. (a) Merchandise certificates issued under this section or the cover

of the booklet in which they are bound, shall bear:

(i) A legend in at least eight-point bold type stating that the buyer

may return unused merchandise certificates so purchased at any time and

that the seller will give the buyer credit for the full face amount of

any certificates so returned and credit for the pro rata credit service

charge if the same is one dollar or more;

(ii) A legend in at least eight point bold type reading substantially

as follows: If you wish to purchase, with merchandise certificates a

single item of goods or services of greater value than the merchandise

certificates you now hold, you may save credit service charge by

returning your unused merchandise certificates for credit and purchasing

new certificates; and

(iii) In the event the statements required by subparagraphs (i) and

(ii) hereof are set forth on the cover of a booklet in which the

merchandise certificates are bound, each certificate shall bear a

notice, "NOT GOOD IF DETACHED".

(b) If a retail seller issues merchandise gift certificates to a

retail buyer to be paid for in instalments (1) in good faith, and (2) in

reliance upon a retail buyers statement that the buyer intends to

transfer it to another as a gift, then such certificate need not set

forth the legends required by subparagraphs (i) and (ii) above; provided

the certificate shall bear the legend "GIFT CERTIFICATE" and the seller

shall give the buyer at the time of issuance of such certificate a

statement, or facsimile of such certificate, which shall identify such

certificate, and shall contain the legend required by subparagraphs (i)

and (ii) above.

6. Notwithstanding the provisions of subdivision three of section four

hundred three of this article, the buyer shall have the right to return

to the holder of a retail instalment obligation executed on or after

October first, nineteen hundred sixty-two, for merchandise certificates,

at any time all merchandise certificates which have not been exchanged

for goods and services, and the holder shall thereupon credit to the

obligation to the extent of the amount owing by the buyer thereon the

full face amount of such unused merchandise certificates returned and

the amount of the pro rata credit service charge thereon, which shall be

computed as of the date of issuance of the merchandise certificates so

returned. Where the amount of the refund of such credit service charge

is less than one dollar no refund need be made.