BILL ANALYSIS
SB 885
Page 1
SENATE THIRD READING
SB 885 (Corbett)
As Amended July 1, 2010
Majority vote
SENATE VOTE :21-12
BUSINESS & PROFESSIONS 6-4
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|Ayes:|Hayashi, Eng, Hill, Ma, | | |
| |Nava, Ruskin | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Niello, Smyth, | | |
| |Nestande | | |
| | | | |
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SUMMARY : Requires a retailer of gift certificates to disclose
that a gift certificate with a value of less than $10 may be
redeemed for 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;
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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
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 : 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
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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
cards went unspent."
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 United States
do not use the full value of their gift cards.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301
FN: 0005122