File No. 296

Senate, March 30, 2011

The Committee on Banks reported through SEN. DUFF of the 25th Dist., Chairperson of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT ENHANCING COMMUNITY BANK COMPETITIVENESS AND FRAUD PREVENTION ON CERTAIN PRODUCTS.

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

Section 1. (NEW) (Effective October 1, 2011) (a) As used in this section, "general-use prepaid card" has the same meaning given to that term in 12 CFR 205.20(a)(3), as from time to time amended.

(b) A general–use prepaid card shall not include an expiration date relative to the underlying funds that are redeemable through the use of the applicable card, code or device. Notwithstanding the provisions of this subsection, a general-use prepaid card may include an expiration date with regard to such card, code or device, provided: (1) The following disclosures are made, in writing, with equal prominence and in close proximity to the expiration date on such card, code or device: (A) That such card, code or device expires, but that the underlying funds do not expire and that the consumer may contact the issuer for a replacement card, code or device; and (B) a toll-free telephone number and an Internet web site address, if one is maintained, that a holder of a general-use prepaid card may use to obtain a replacement card, code or device after such card, code or device expires; (2) no fee or charge is imposed on such holder for replacing the card, code or device or for providing such holder with the remaining balance in some other manner, provided the card, code or device has not been lost or stolen; and (3) the seller of the card, code or device has established policies and procedures to provide consumers a reasonable opportunity to purchase a card, code or device that has not less than five years remaining until the card, code or device expires.

(c) For purposes of complying with the disclosure requirements of subdivision (1) of subsection (b) of this section, the issuer of the general-use prepaid card may provide disclosures that are consistent with the applicable provisions of 12 CFR 205.20(e), as from time to time amended.

Sec. 2. Subdivision (5) of section 3-56a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2011):

(5) "Gift certificate" means a record evidencing a promise, made for consideration, 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] 47 CFR 20.3 or general-use prepaid cards, as defined in section 1 of this act;

Statement of Legislative Commissioners:

In section 1(a), "12 CFR Section 205.20(a)(3)" was changed to "12 CFR 205.20(a)(3)" for consistency in citation form to federal regulations. In section 1(b)(3), "card, code or device expiration date expires" was changed to "card, code or device expires" for consistency and clarity. In section 2(5) "47 C.F.R. Sec. 20.3" was changed to "47 CFR 20.3" for consistency in citation form to federal regulations.

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

The bill results in no fiscal impact to the state as it concerns the usage of “general-use prepaid card” transactions between individuals and private entities.

The Out Years

State Impact: None

Municipal Impact: None

OLR Bill Analysis

SB 1078

AN ACT ENHANCING COMMUNITY BANK COMPETITIVENESS AND FRAUD PREVENTION ON CERTAIN PRODUCTS.

SUMMARY:

This bill prohibits a “general-use prepaid card” from including an expiration date for the underlying funds redeemable through its use, but allows an expiration date for the general-use prepaid card if certain requirements are met.

A “general-use prepaid card” is a card, code, or other device issued to a consumer in exchange for payment, on a prepaid basis and in a specific amount, primarily for personal, family, or household purposes. It is redeemable when presented at multiple, unaffiliated merchants for goods or services, or usable at automated teller machines.

The bill also excludes general-use prepaid cards from the definition of “gift certificate.”

EFFECTIVE DATE: October 1, 2011

EXPIRATION DATE REQUIREMENTS

Under the bill, a general-use prepaid card can include an expiration date if it provides the following information:

1. that the underlying funds do not expire and a consumer can obtain a replacement general-use prepaid card from the issuer and

2. a toll-free telephone number and an Internet website address, if one is available, that a holder of a general-use prepaid card can use to replace it after it expires.

This information must be in writing, equally prominent, and in close proximity to the expiration date on the general-use prepaid card. An issuer can satisfy this requirement by providing disclosures consistent with federal regulation (see BACKGROUND).

The bill prohibits a general-use prepaid card from including an expiration date if a fee or charge is imposed on the holder for replacing it or providing the holder with its remaining balance, so long as it has not been lost or stolen. It also requires the seller of the general-use prepaid card with an expiration date to have policies and procedures to provide consumers with a reasonable opportunity to purchase a general-use prepaid card with at least five years remaining until it expires.

BACKGROUND

Related Federal Law

Federal regulations define and establish requirements for selling or issuing a general-use prepaid card with an expiration date (12 CFR 205.20). In general, they prohibit such sale or issuance unless:

1. there are policies or procedures to provide consumers with a reasonable opportunity to purchase a general-use prepaid card with at least five years remaining until its expiration date;

2. the expiration date for the underlying funds is at least the later of (a) the general-use prepaid card's expiration date or (b) five years after the date it was issued or the date on which funds were last added to it;

3. certain disclosures are made concerning the expiration date of the underlying funds and obtaining a replacement card; and

4. there is no fee or charge on the holder of the general-use prepaid card for replacing it or providing the holder with its remaining balance, unless it has been lost or stolen.

Gift Certificate

State law defines “gift certificate” as a record evidencing a promise, made for consideration, 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. It includes:

1. a prefunded record containing a microprocessor chip, magnetic strip, or other means to store information and for which an amount is deducted from the stored value upon each use;

2. a gift card or electronic gift card;

3. a stored-value card or certificate;

4. a store card; or

5. a similar record or card.

It does not include prepaid calling cards or prepaid commercial mobile radio services (CGS § 3-56a(5)).

COMMITTEE ACTION

Banks Committee

Joint Favorable