BILL ANALYSIS
SB 885
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Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 885 (Corbett) - As Amended: June 14, 2010
SENATE VOTE : 21-12
SUBJECT : Gift certificates: redemption.
SUMMARY : Requires that a gift certificate sold after January 1,
2012, be printed with a statement that the cash value of less
than $10 may be redeemable in cash, as specified, and deletes
provisions allowing dormancy fees for non-use of the gift
certificate, as specified.
EXISTING LAW :
1)Makes it unlawful to sell a gift certificate that contains an
expiration date or a service fee, including, but not limited
to, a service fee for dormancy.
2)Requires any gift certificate sold after January 1, 1997, to
be redeemable in cash for its cash value, or replaceable with
a new gift certificate at no cost to the purchaser or holder.
3)Requires any gift certificate with a cash value of less than
$10 to be redeemable in cash for its cash value.
4)Exempts from the requirements above, the following gift
certificates issued on or after January 1, 1998, with the
expiration date appearing in capital letters in at least
10-point font on the front of the gift certificate:
a) Those distributed by the issuer to a consumer pursuant to an
awards, loyalty, or promotional program for free.
b) Those donated or sold below face value at a volume discount
to employers or to nonprofit and charitable organizations
for fundraising purposes if the expiration date on those
gift certificates is less than 30 days after the date of
sale; and,
c) Gift certificates that are issued for perishable food
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products.
5)Exempts dormancy fee requirements for the following gift cards
when:
a) The remaining value of the gift card is $5 or less each
time the fee is assessed;
b) The fee does not exceed $1 per month;
c) There has been no activity on the gift card for 24
consecutive months, including, but not limited to,
purchases, adding value, or balance inquiries;
d) The holder may reload or add value to the gift card; and,
e) A statement is printed on the gift card in at least 10-point
font stating the amount of the fee, the frequency of the
fee, that the fee is triggered by inactivity of the gift
card, and when the fee will be charged. The statement may
appear on the front or back of the gift card, but shall
appear in a location where it is visible to any purchaser
prior to purchase.
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal.
COMMENTS :
Purpose of this bill . According to the author's office, "While
consumers gained new rights under SB 250 [(Corbett), Chapter
640, Statutes of 2007] many retailers are refusing to comply
with the law. Starbucks was taken to court by three counties ?
and agreed last summer to pay $225,000 in civil penalties for
not complying with the law.
"Consumerwatch, part of the news organization KPIX, visited
about two dozen stores in San Francisco and inquired if they
could redeem a gift card valued at $10 or less. Sales clerks at
more than half the stores refused.
"In these difficult times, consumers have the right to have
ready access to liquid assets, including cash and gift cards.
The remainder on their unused gift cards could make the
difference in paying their bills and making ends meet. This
problem is so common that in 2009 nearly $5 billion in gift
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cards went unspent."
Background . Over the last several years, gift cards have become
increasingly popular as a means of gift-giving. According to
the financial consulting firm TowerGroup, Americans spent $88.4
billion on gift cards in 2008, but left $6.4 billion unspent.
More than $100 million in gift card value was invalidated in
bankruptcies and liquidations. In 2009, Americans spent $87
billion on gift cards, with approximately $5 billion unspent.
TowerGroup also reported that 40% of gift card recipients in the
U.S. do not use the full value of their gift cards.
Support . The Consumer Union writes in support, "Consumers have
long been frustrated, and remain frustrated, with the inability
to use remaining gift card values on their gift cards. SB 885
will better inform both the recipients and merchants about the
requirement to redeem values on gift cards with a remaining cash
value of up to $10. It provides consumers the ability to use
millions of unused gift card funds which would otherwise go
unspent."
Oppose . Opponents, including the National Federation of
Independent Business, state, "As you know, the requirements of
SB 250 came about as a result of a compromise crafted by the
Assembly Business and Professions Committee. After just over
two years with this law in place, now is not the time to change
California's gift card law again. Gift card sellers are still
reeling from the impact of the recession and should not be
required to incur additional expenses to change their gift
cards. Even with the delayed implementation date that was
amended into the bill?this bill will still be costly for
businesses and difficult to comply with."
Previous legislation . SB 250 (Corbett), Chapter 640, Statutes
of 2007 allowed any gift card, as defined, with a cash value of
less than $10 to be redeemed in cash for its cash value.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation
CALPIRG
Consumer Action
Consumer Attorneys of California
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Consumer Federation of California
Consumers Union
Opposition
Best Buy
California Business Properties Association
California Chamber of Commerce
California Grocers Association
California Independent Grocers Association
California Manufacturers and Technology Association
California Retailers Association
California Theater Owners Association
California Travel Industry Association
CTIA The Wireless Association
CVS Pharmacy
First Data
International Council of Shopping Centers
International Franchise Association
Lowe's
National Federation of Independent Business
National Retail Federation
Retail Industry Leaders Association
Rite Aid
Safeway
Target
TechAmerica
The Home Depot
T-Mobile
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301