S T A T E O F N E W Y O R K
________________________________________________________________________
704
2025-2026 Regular Sessions
I N S E N A T E
(PREFILED)
January 8, 2025
___________
Introduced by Sen. KRUEGER -- read twice and ordered printed, and when
printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to enacting the
"New York gift certificate scam prevention act"
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Short title. This act shall be known and may be cited as
the "New York gift certificate scam prevention act".
§ 2. Paragraph (a) of subdivision 1 of section 396-i of the general
business law, as amended by chapter 668 of the laws of 2021, is amended
to read as follows:
(a) For the purposes of this section, the following terms shall have
the following meanings:
(1) "gift certificate" shall mean [a certificate, electronic card, or
other pre-funded record that: (i) is usable at a single merchant or an
affiliated group of merchants that share the same name, mark, or logo,
or is usable at multiple, unaffiliated merchants or service providers;
and (ii) is issued in a specified amount; and (iii) may or may not be
increased in value or reloaded; and (iv) is purchased and/or loaded on a
prepaid basis for the future purchase or delivery of any goods or
services; and (v) is honored upon presentation] AN OPEN LOOP GIFT
CERTIFICATE OR A CLOSED LOOP GIFT CERTIFICATE;
(2) "open loop gift certificate" shall mean a gift certificate redeem-
able at multiple, unaffiliated merchants or service providers; [and]
(3) "CLOSED LOOP GIFT CERTIFICATE" SHALL MEAN A CARD, CODE, OR DEVICE
THAT IS:
(I) ISSUED TO A CONSUMER ON A PREPAID BASIS PRIMARILY FOR PERSONAL,
FAMILY, OR HOUSEHOLD PURPOSES IN A SPECIFIED AMOUNT, REGARDLESS OF
WHETHER SUCH AMOUNT MAY BE INCREASED OR RELOADED IN EXCHANGE FOR
PAYMENT; AND
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02522-01-5
S. 704 2
(II) REDEEMABLE ON PRESENTATION BY A CONSUMER AT A SINGLE MERCHANT OR
A GROUP OF AFFILIATED MERCHANTS.
(4) "promotional gift certificate" shall mean a gift certificate
issued for no consideration which includes on the front of the gift
certificate (i) a statement indicating that the card is issued for
promotional purposes and (ii) the expiration date for the underlying
funds; AND
(5) "THIRD-PARTY GIFT CERTIFICATE RESELLER" SHALL MEAN A MERCHANT WHO,
WITHOUT AUTHORIZATION FROM OR AFFILIATION WITH THE BUSINESS ENTITY ISSU-
ING AN OPEN LOOP GIFT CERTIFICATE, IS ENGAGED IN THE BUSINESS OF BUYING
OPEN LOOP GIFT CERTIFICATES OR RESELLING OPEN LOOP GIFT CERTIFICATES TO
CONSUMERS.
§ 3. Subdivisions 4, 5, 5-a, 5-b and 6 of section 396-i of the general
business law are renumbered subdivisions 5, 6, 7, 8 and 9, and a new
subdivision 4 is added to read as follows:
4. (A) FOR AN IN-PERSON SALE OF A GIFT CERTIFICATE, SUCH GIFT CERTIF-
ICATE SHALL BE ENCLOSED IN SECURE PACKAGING THAT:
(I) IS SEALED IN A MANNER THAT IS NOT EASILY OPENED WITHOUT SIGNS OF
TAMPERING;
(II) EXCEPT AS OTHERWISE PROVIDED IN SUBPARAGRAPH (III) OF THIS PARA-
GRAPH, CONCEALS ALL NUMERIC CODES SPECIFIC TO THE ACTIVATION OR THE
REDEMPTION OF SUCH GIFT CERTIFICATE, INCLUDING BUT NOT LIMITED TO, BAR
CODES, CVV NUMBERS, PIN NUMBERS, AND ACTIVATION CODES;
(III) DISPLAYS AN ACTIVATION CODE, BAR CODE, OR OTHER ACTIVATION DATE
ONLY IF THE PACKAGING USED IS MORE SECURE THAN IT OTHERWISE WOULD BE IF
THE DATA WERE FULLY CONCEALED; AND
(IV) INCLUDES THE FOLLOWING WARNING OR A SUBSTANTIALLY SIMILAR WARNING
THAT STATES THE FOLLOWING LANGUAGE: "DO NOT SELL OR PURCHASE IF PACKAG-
ING HAS BEEN BROKEN OR INDICATES TAMPERING".
(B) A MERCHANT MAY SELL A GIFT CERTIFICATE THAT IS NOT ENCLOSED IN
SECURE PACKAGING AS REQUIRED UNDER PARAGRAPH (A) OF THIS SUBDIVISION IF
(I) SUCH GIFT CERTIFICATE IS A CHIP-ENABLED, NUMBERLESS CARD THAT IS
ACTIVATED BY A CONSUMER AFTER REGISTERING SUCH GIFT CERTIFICATE ON THE
ISSUER'S WEBSITE; OR (II) SUCH GIFT CERTIFICATE IS SOLD EXCLUSIVELY BY
SUCH MERCHANT OR A GROUP OF AFFILIATED MERCHANTS FOR USE ONLY AT THE
RETAIL ESTABLISHMENTS OF SUCH MERCHANT OR AFFILIATED MERCHANTS AND IS
SECURED IN A PHYSICAL LOCATION WITHIN SUCH MERCHANT'S RETAIL ESTABLISH-
MENT THAT IS ACCESSIBLE ONLY BY AN EMPLOYEE OF SUCH MERCHANT.
(C) A MERCHANT THAT DISPLAYS A GIFT CERTIFICATE FOR SALE AT A RETAIL
ESTABLISHMENT SHALL PROVIDE TRAINING TO ALL EMPLOYEES OF SUCH MERCHANT
WHOSE DUTIES REGULARLY INCLUDE THE SALE OF OPEN LOOP GIFT CERTIFICATES
AND/OR CLOSED LOOP GIFT CERTIFICATES TO CONSUMERS ON HOW TO IDENTIFY AND
RESPOND TO GIFT CERTIFICATE SCAMS.
(D) (I) SUBJECT TO THE PROVISIONS OF SUBPARAGRAPH (II) OF THIS PARA-
GRAPH, WHEN A THIRD-PARTY GIFT CERTIFICATE RESELLER SELLS AN OPEN LOOP
GIFT CERTIFICATE AS PART OF A TRANSACTION OCCURRING IN THIS STATE, SUCH
THIRD-PARTY GIFT CERTIFICATE RESELLER SHALL RECORD AND MAINTAIN FOR A
MINIMUM OF THREE YEARS, A COPY OF THE FOLLOWING:
(1) THE NAME OF THE PERSON WHO CONDUCTED THE TRANSACTION;
(2) THE NAME, AGE, AND ADDRESS OF THE SELLER OF THE OPEN LOOP GIFT
CERTIFICATE;
(3) THE SELLER'S AND CONSUMER'S DRIVER'S LICENSE OR OTHER IDENTIFICA-
TION CARD NUMBER;
(4) A DESCRIPTION OF THE PURCHASED OPEN LOOP GIFT CERTIFICATE INCLUD-
ING THE RETAILER FOR WHICH SUCH OPEN LOOP GIFT CERTIFICATE IS INTENDED
FOR USE AND SUCH OPEN LOOP GIFT CERTIFICATE'S IDENTIFICATION NUMBER;
S. 704 3
(5) THE SPECIFIC AMOUNT ISSUED ON THE OPEN LOOP GIFT CERTIFICATE;
(6) THE PRICES PAID TO CONDUCT THE TRANSACTION; AND
(7) THE SIGNATURE OF THE CONSUMER.
(II) (1) THE INFORMATION RECORDED AND MAINTAINED UNDER THIS PARAGRAPH
SHALL BE RECORDED CHRONOLOGICALLY IN INK WRITING OR LOGGED INTO A SECURE
DATABASE, SOFTWARE SYSTEM, OR OTHER SIMILAR TECHNOLOGY PLATFORM. EXCEPT
AS PROVIDED IN CLAUSE TWO OF THIS SUBPARAGRAPH, RECORDED INFORMATION
MADE IN INK WRITING SHALL NOT BE DESTROYED, ALTERED, OR ERASED WITHIN
THE TIME FRAME SUCH RECORDED INFORMATION IS REQUIRED TO BE KEPT UNDER
SUBPARAGRAPH (I) OF THIS PARAGRAPH.
(2) A HANDWRITTEN CORRECTION MAY BE MADE TO AN ENTRY OF INFORMATION BY
DRAWING A LINE OF INK THROUGH SUCH ENTRY IN A MANNER THAT RETAINS LEGI-
BILITY. INFORMATION RECORDED UNDER THIS SECTION SHALL BE OPEN TO
INSPECTION BY ANY DULY AUTHORIZED LAW ENFORCEMENT OFFICER: (A) DURING
THE ORDINARY BUSINESS HOURS OF THE THIRD-PARTY GIFT CERTIFICATE RESELL-
ER; OR (B) AT ANY REASONABLE TIME.
(3) A THIRD-PARTY GIFT CERTIFICATE RESELLER, INCLUDING AN AGENT OR
EMPLOYEE OF SUCH THIRD-PARTY GIFT CERTIFICATE RESELLER, SHALL NOT: (A)
FAIL TO MAKE AN ENTRY OF OR FALSIFY, DESTROY, OR REMOVE ANY INFORMATION
REQUIRED TO BE RECORDED AND MAINTAINED UNDER THIS SECTION; (B) REFUSE TO
ALLOW ANY DULY AUTHORIZED LAW ENFORCEMENT OFFICER TO INSPECT A RECORD OF
INFORMATION OR OPEN LOOP GIFT CERTIFICATE IN SUCH THIRD-PARTY GIFT
CERTIFICATE RESELLER'S POSSESSION DURING THE ORDINARY BUSINESS HOURS OF
SUCH RESELLER OR AT ANY REASONABLE TIME; OR (C) FAIL TO MAINTAIN A
RECORD OF EACH OPEN LOOP GIFT CERTIFICATE AND TRANSACTION FOR AT LEAST
THREE YEARS AS REQUIRED UNDER SUBPARAGRAPH (I) OF THIS PARAGRAPH.
§ 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law.