Senate File 2372 - Introduced SENATE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO SF 2091) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the issuance or redemption of gift 2 certificates, establishing restrictions on fees and charges, 3 prohibiting expiration dates, and making penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5597SV 82 6 rn/nh/5 PAG LIN 1 1 Section 1. NEW SECTION. 555D.1 DEFINITION. 1 2 1. As used in this chapter, unless the context otherwise 1 3 requires, "gift certificate" means a writing, instrument, 1 4 record, or other tangible medium of expression generally 1 5 purchased by a buyer for use by a person other than the buyer, 1 6 or for use by the buyer at a later date, for the purchase of 1 7 goods, property, services, or other consideration sold or 1 8 provided by the seller or issuer and includes but is not 1 9 limited to all of the following: 1 10 a. An electronic card with a stored dollar value. 1 11 b. A merchandise credit. 1 12 c. A certificate or card exchangeable for the full face 1 13 value of a future purchase or delivery of goods, property, 1 14 services, or any other consideration. 1 15 d. Any other medium that evidences a grant of 1 16 consideration in exchange for the right to redeem the 1 17 certificate for goods, property, services, credit, or money of 1 18 at least an equal value as that of the certificate. 1 19 2. "Gift certificate" excludes any electronic card, or 1 20 other medium issued or sold by federally insured financial 1 21 institutions or their affiliates or operating subsidiaries, 1 22 which can be used at multiple sellers of goods and services 1 23 provided any expiration date and associated fees are 1 24 disclosed. 1 25 Sec. 2. NEW SECTION. 555D.2 GIFT CERTIFICATES == FEES == 1 26 EXPIRATION DATES == VIOLATIONS. 1 27 1. A gift certificate shall be redeemable for its full 1 28 value. A seller, issuer, or holder of a gift certificate may 1 29 not do any of the following: 1 30 a. Assess, charge, or deduct a fee or other charge from or 1 31 with respect to a gift certificate. 1 32 b. Sell or issue a gift certificate that includes, bears, 1 33 or is otherwise subject to an expiration date. 1 34 c. Impose any other term or condition on a gift 1 35 certificate that would limit the ability of the owner to 2 1 redeem the gift certificate for its full value. 2 2 2. A violation of this section is an unlawful practice 2 3 under section 714.16. 2 4 Sec. 3. NEW SECTION. 555D.3 EXPIRATION DATES AND FEES == 2 5 EXCEPTIONS. 2 6 1. A person or entity may enforce against the owner of a 2 7 gift certificate an expiration date in a gift certificate, and 2 8 may assess or deduct any charge or fee from the monetary value 2 9 of a gift certificate, including but not limited to a service, 2 10 maintenance, cash=out, reactivation, replacement card, 2 11 dormancy, or inactivity fee, in any of the following 2 12 circumstances: 2 13 a. The gift certificate is issued pursuant to an awards, 2 14 loyalty, or promotional program or in other similar 2 15 circumstance where no money or other thing of value is given 2 16 in exchange for the certificate. 2 17 b. The gift certificate is donated to a charitable 2 18 organization without any money or other thing of value being 2 19 given in exchange for the certificate and the charitable 2 20 organization uses the certificate solely to provide its 2 21 charitable services or for its fund=raising activities. 2 22 2. An expiration date or fee displayed on a gift 2 23 certificate which was issued or donated as provided in 2 24 subsection 1 shall be disclosed clearly and legibly on the 2 25 gift certificate in a location where it is visible to any 2 26 purchaser before purchasing the certificate, and any such 2 27 expiration date shall be at least one year from the date the 2 28 gift certificate is issued and delivered to the owner. 2 29 Sec. 4. Section 556.1, Code Supplement 2007, is amended by 2 30 adding the following new subsection: 2 31 NEW SUBSECTION. 4A. "Gift certificate" means a writing, 2 32 instrument, record, or other tangible medium of expression 2 33 generally purchased by a buyer for use by a person other than 2 34 the buyer, or for use by the buyer at a later date, for the 2 35 purchase of goods, property, services, or other consideration 3 1 sold or provided by the seller or issuer and includes but is 3 2 not limited to all of the following: 3 3 a. An electronic card with a stored or banked dollar 3 4 value. 3 5 b. A merchandise credit. 3 6 c. A certificate or card exchangeable for the full face 3 7 value of a future purchase or delivery of goods, property, 3 8 services, or any other consideration. 3 9 d. Any other medium that evidences a grant of 3 10 consideration in exchange for the right to redeem the 3 11 certificate for goods, property, services, credit, or money of 3 12 at least an equal value as that of the certificate. 3 13 Sec. 5. Section 556.9, subsection 2, Code 2007, is amended 3 14 by striking the subsection. 3 15 EXPLANATION 3 16 This bill relates to the issuance of gift certificates. 3 17 The bill provides a definition of gift certificate, which 3 18 includes a writing or instrument usable for the purchase of 3 19 goods, property, or services sold or provided by the seller or 3 20 issuer of the gift certificate, and excludes any electronic 3 21 card or other medium issued or sold by federally insured 3 22 financial institutions which can be used at multiple sellers 3 23 of goods or services, provided expiration dates and fees are 3 24 disclosed. The bill provides that a gift certificate shall be 3 25 redeemable for its full value and prohibits a seller, issuer, 3 26 or holder of a gift certificate from assessing any fee or 3 27 charge against the value of the certificate or selling or 3 28 issuing a certificate with an expiration date. Further, the 3 29 bill prohibits a seller, issuer, or holder from imposing any 3 30 other term or condition that limits the ability of the owner 3 31 to redeem the gift certificate for its full value. The bill 3 32 provides an exception to these prohibitions when a certificate 3 33 is issued pursuant to a promotional program or for charitable 3 34 fund=raising and no money or other thing of value is given in 3 35 exchange for it. The bill prescribes that an issuer in 4 1 violation of these provisions shall be subject to the consumer 4 2 fraud provisions of Code section 714.16. 4 3 The bill repeals a provision in Code chapter 556, dealing 4 4 with unclaimed property, which currently permits the deduction 4 5 from the face value of a gift certificate of a charge imposed 4 6 due to the failure of the owner of the certificate to present 4 7 it in a timely manner, provided that a valid and enforceable 4 8 written contract exists between the issuer and the owner of 4 9 the gift certificate and the issuer regularly imposes such 4 10 charges and does not regularly reverse or otherwise cancel 4 11 them. 4 12 LSB 5597SV 82 4 13 rn/nh/5