FUMO TRYING TO PROTECT VALUE OF
GIFT CARDS TO CONSUMERS
HARRISBURG, December 10, 2007
– State Senator Vince Fumo today reminded holiday shoppers to be aware of the
pitfalls of gift cards, and he wrote to the chair of the Senate Consumer
Protection and Professional Licensure Committee asking that his legislation
guarding the value of such cards advance to the Senate floor.
“Gift cards are becoming an increasingly popular
holiday item because of their convenience, but consumers need to be aware that
the recipients of the cards are sometimes shortchanged,” Fumo warned.
Fumo (D-Philadelphia) has introduced a bill that would
guarantee Pennsylvania consumers the right to obtain the full value of gift
certificates, even if they are not redeemed for several years. The legislation
(SB 928) is intended to clarify the confusing state law regarding the issuance,
use, expiration and reversion of gift certificates in the state. A bipartisan
group of 17 co-sponsors introduced the bill in addition to Fumo.
Americans last year spent an estimated $80 billion on
gift certificates and gift cards, and the number could reach $100 million this
year, according to news media reports. A significant portion, perhaps as high as
10 percent, often goes unused.
While the unused money belongs to consumers, current state law is not clear
enough to make sure that they actually receive it. It is often retained by the
issuer as a "handling fee" or "inactivity fee."
Under the bill, if a business chooses to place an
expiration date on a gift certificate, it can be no less than two years beyond
the date of issuance. Even if it does list an expiration date, however, the
business would still be required to redeem the certificate for the full face
value through five years.
After five years, the consumer could recover the value
as unclaimed property through the state Treasury under escheat laws. The bill
would require sellers to record the address of the eventual recipient to make
recovery more feasible.
The bill also addresses the gradual erosion of card
value through fees. Some retailers retroactively impose a monthly inactivity fee
if a card is not used for a given period, which can wipe out the value of the
card. This practice would be outlawed under the Fumo legislation.
Fumo sent a letter today to Sen. Robert Tomlinson
(R-Bucks), the chairman of the Consumer Protection and Professional Licensure
Committee, where the bill now resides. The committee meets tomorrow, and could
report the bill to the full Senate.
In the letter, Fumo noted that at least 30 states have
already passed laws regulating gift cards, including limitations or prohibitions
“It would be fitting to move this measure out of the
Consumer Protection and Professional Licensure Committee during the holiday
shopping season, and at the same time let Pennsylvanians know that their
legislators are aware of the problem and are willing to correct it in the
immediate future,” Fumo wrote.
# # #
(On Senate Letterhead)
Robert M. Tomlinson
Room 362 Main Capitol
Harrisburg, PA 17120
I write to ask
respectfully that you schedule for a committee vote Senate Bill 928, which would
protect Pennsylvania consumers from losing the value of purchased gift cards.
Over the past few years, gift cards have become a very popular holiday item.
Last year, more than $80 billion worth were sold. This holiday season, the
number could go as high as $100 billion.
A growing concern
arises from the increasingly common use of gift cards, however, because the
recipient, for various reasons, often does not receive full face value for the
card. He or she may not use all the credit on the card at once, and then forgets
that a balance remains. Much of that credit is never used at a future time.
According to an article in the Parade Magazine, experts have determined
that $8 billion went unspent last year.
Another issue is
that some cards lose their purchasing power if not used during a specified
period of time. A third problem is that some banks impose a maintenance charge
for each month that the gift card is not used within a certain period of time.
To address these
problems, more than 30 states have passed laws regulating gift cards, including
limiting or prohibiting fees. Some states have also required retail stores or
banks to clearly spell out the limitations of the gift card.
Senate Bill 928,
which I have sponsored along with a bipartisan group of 17 of our colleagues,
remedies the most severe problems with gift cards. Under this legislation,
retail establishments and banks must give the recipient of the gift card at
least two years to expend the credit on the card. The legislation also would
prohibit any transaction or service fees.
It would be
fitting to move this measure out of the Consumer Protection and Professional
Licensure Committee during the holiday shopping season, and at the same time let
Pennsylvanians know that their legislators are aware of the problem and are
willing to correct it in the immediate future. I respectfully ask that you bring
the bill up for a vote.