In December, we wrote about a new gift card law in New York that took effect on Christmas day (http://www.alston.com/advisories/ny-gift-card-legislation/), which was enacted by Senate Bill S. 4771-E. Under that now-effective law:
- Gift card issuers are prohibited from charging a service fee before the twenty-fifth month of dormancy, and any service fees that are applied after this time must be waived and put back on the card if the card is used within three years of the issue date.
- No gift card may have an expiration date of earlier than five years from the date the card was issued or the date the funds were last loaded to the card, and the terms of any expiration must be clearly and conspicuously stated on the card. This restriction does not apply to cards “sold below face value or at a volume discount to employees, to nonprofit and charitable organizations, or educational institutions for fundraising purposes” or cards distributed to a consumer or employee as part of an awards, rewards, loyalty or promotional program without any consideration being given in exchange for the card by the consumer or employee.
- Issuers are required to disclose clearly and conspicuously the procedure for replacing cards that are lost, stolen or destroyed, if any such procedure exists.
On January 4, 2017, a bill was introduced in the New York State Senate to be considered during the 2017 session that would prohibit expiration dates on gift certificates entirely (S. 703). Notably, the bill only revises subdivision 3 of section 396-i of the General Business Law, which requires the terms and conditions of a gift certificate to be clearly and conspicuously stated, and it does not impact subsection 5-a, which was just enacted as part of S. 4771-E and contains the 5-year expiration restriction. Presumably, S. 703 would need to be amended to address subsection 5-a. Thus, in order for S. 703 to be enacted, the legislature will have to expressly override the two-week old S. 4771-E. It seems unlikely that the legislature will do so in such short order. However, we will monitor this bill and update this post if and when the bill moves through the legislature.
