BILL NUMBER: S7905

SPONSOR: THOMAS
 
TITLE OF BILL:

An act to amend the general business law, in relation to providing
notice of certain scams when selling gift cards

 
PURPOSE OF BILL:

To require businesses to post notice alerting customers about gift card
scams.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends section 396-i of the general business law by adding a
new subdivision 2-b. Subdivision 2-b, paragraph (a) states that no busi-
ness or store can let individuals purchase gift cards unless a notice
alerting customers about gift card scams. Paragraph (b) states that the
notice can be displayed two ways, with subparagraph (i) stating if the
business has an electronic paying system, the notice may be displayed on
              

the screen prior to finalizing the purchase and subparagraph (ii) stat-
ing if the business does not have a electronic screen, the notice shall
be posted in the location where the sale occurs.

Section 2 is the effective date.

 
JUSTIFICATION:

The number of scammers using gift cards as a mechanism to obtain money
is steadily growing. According to a 2018 AARP report, 26 percent of
scammers used gift cards as their main way to con consumers into
payment, which was an increase 7 percent that used them in 2015(1).
These scams are often phone calls targeting consumers, particularly the
elderly and immigrants, stating that they owe money where payment is
required by gift card. These individuals purchase the gift cards due to
being unaware they are being scammed and believe they will be penalized
if they do not comply.

The increasing amounts of these scams prompted Consumer Reports and the
Public Service Commission to issue statements about the warning signs of
gift card scams(2). Despite these public service announcements from
Consumer Reports and the Public Service Commission, consumers continue
to be taken advantage of by gift card scams.

This bill would require stores where gift cards are sold to post a
notice alerting customers to protect themselves from gift card scams.
By requiring a warning message for consumers, it will reduce the success
rate of these scammers. The warning message will help all customers be
more aware of gift card scams, and will encourage vulnerable customers
to alert law enforcement if they believe they are being scammed.

 
PRIOR LEGISLATIVE HISTORY:

New Bill

 
FISCAL IMPLICATIONS:

None
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.
(1) How Gift Card Scams Are Used to Finance Fraud, AARP,
https://www.aarp.oremoneyiscams-fraud/info-2019/gift-card-fraud.html
(2) Note: Department of Public Service (2017) Governor Cuomo Urges New
Yorkers to Protect Personal Information during the Holiday Shopping
Season. This was first reported by the governor, and reported by the
Department of public service to protect consumers from scammers gaining
personal information or payments through the use of various ways during
the holiday season.