Connecticut Seal

General Assembly

 

Raised Bill No. 892

January Session, 2009

 

LCO No. 3350

 

*03350_______GL_*

Referred to Committee on General Law

 

Introduced by:

 

(GL )

 

AN ACT CONCERNING GIFT CERTIFICATES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (5) of section 3-56a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2009):

(5) "Gift certificate" means a record evidencing a promise, made for consideration or donated to a charitable or political organization, by the seller or issuer of the record that goods or services will be provided to the owner of the record to the value shown in the record and includes, but is not limited to, a record that contains a microprocessor chip, magnetic stripe or other means for the storage of information that is prefunded and for which the value is decremented upon each use, a gift card, an electronic gift card, stored-value card or certificate, a store card, or a similar record or card, but "gift certificate" does not include prepaid calling cards regulated under section 42-370 or prepaid commercial mobile radio services, as defined in 47 C.F.R. Sec. 20.3.

Sec. 2. Section 42-460 of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2009):

(a) No person may sell or issue a gift certificate [, as defined in section 3-56a,] that is subject to an expiration date, a dormancy charge or fee, escheat charge or fee, inactivity charge or fee or any similar charge, fee or penalty for inactivity. No gift certificate or any agreement with respect to such gift certificate may contain language suggesting that an expiration date or such dormancy, escheat, inactivity or similar charge, fee or penalty for inactivity may apply to the gift certificate. As used in this section, "gift certificate" shall have the same meaning as defined in subdivision (5) of section 3-56a, as amended by this act; and "inactivity fee" means a deduction against the balance on such gift certificate when the balance or any portion of such balance has not been spent within a specified time.

(b) Nothing in this section shall be construed to prevent a holder from honoring a gift certificate, the unredeemed value of which has been reported to the Treasurer pursuant to part III of chapter 32, and thereafter seeking reimbursement from the Treasurer.

(c) Any person selling or issuing a gift certificate shall maintain a secured line of credit or hold in trust in a separate escrow account in an amount equal to the unredeemed value of all outstanding gift certificates issued or sold by such person. Such amount shall be adjusted at least thirty days from its establishment or most recent adjustment to reflect the value of any additional sales or issues and any redemptions since the establishment or most recent adjustment. As used in this subsection, "escrow account" means an account in a bank chartered by the state of Connecticut, any other state or the federal government, where such funds are separate from the funds of the company issuing such certificate and are held in trust for the holders of such gift certificate and "secured line of credit" means an irrevocable letter of credit issued by a bank or other state or federally chartered financial institution that provides the Department of Consumer Protection as beneficiary in the event of a default by the person selling or issuing a gift certificate in the promise to redeem any gift card or gift certificate. Such letter of credit shall be reissued annually with a copy delivered to the Commissioner of Consumer Protection.

(d) Any person selling or issuing a gift certificate that is not subject to the provisions of this section because such provisions are preempted by the federal National Bank Act shall provide a written notice on such gift certificate substantially similar to the following: "This gift card or certificate has an expiration date or inactivity fee. Connecticut law banning such fees and expiration dates does not apply to cards or certificates issued by national banks." In addition to such notice, the person selling or issuing such gift certificate shall provide a clear and conspicuous description of any expiration date, dormancy, escheat or inactivity charge or fee or any similar charge, fee or penalty for inactivity.

(e) A violation of the provisions of this section shall be an unfair or deceptive trade practice under subsection (a) of section 42-110b.

This act shall take effect as follows and shall amend the following sections:

Section 1

July 1, 2009

3-56a(5)

Sec. 2

July 1, 2009

42-460

Statement of Purpose:

To protect consumers who purchase or receive gift certificates.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]