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This entry was published on 2022-01-28
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SECTION 396-I
Acceptance of unexpired gift certificates
General Business (GBS) CHAPTER 20, ARTICLE 26
§ 396-i. Acceptance of unexpired gift certificates. * 1. For the
purposes of this section, "gift certificate" shall mean a written
promise or electronic payment device 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. Gift
certificate shall not include an electronic payment device linked to a
deposit account, or prepaid telephone calling cards regulated under
section ninety-two-f of the public service law. Gift certificate also
shall not include flexible spending arrangements as defined in Section
106(c)(2) of the Internal Revenue Code, 26 U.S.C. § 106(c)(2); flexible
spending accounts subject to Section 125 of the Internal Revenue Code,
26 U.S.C. § 125; Archer MSAs as defined in Section 220(d) of the
Internal Revenue Code, 26 U.S.C. § 220(d); dependent care reimbursement
accounts subject to Section 129 of the Internal Revenue Code, 26 U.S.C.
§ 129; health savings accounts subject to Section 223(d) of the Internal
Revenue Code, 26 U.S.C. § 223(d), as amended by Section 1201 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003,
Pub. L. No. 108-173; or similar accounts from which, under the Internal
Revenue Code and its implementing regulations, individuals may pay
medical expenses, health care expenses, dependent care expenses, or
similar expenses on a pretax basis. Gift certificate also shall not
include a prepaid discount card or program used to purchase identified
goods or services at a price or percentage below the normal and
customary price; provided that the expiration date of the prepaid
discount card or program is clearly and conspicuously disclosed. Gift
certificate also shall not include payroll cards or other electronic
payment devices which are linked to a deposit account and which are
given in exchange for goods or services rendered.

* NB Effective until December 10, 2022

* 1. (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;

(2) "open loop gift certificate" shall mean a gift certificate
redeemable at multiple, unaffiliated merchants or service providers; and

(3) "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.

(b) Gift certificate shall not include (i) an electronic payment
device linked to a deposit account or which is covered by the exclusion
set forth in 15 U.S.C. § 1693 L-1(a)(2)(D)(ii), (ii) a fare payment card
or electronic payment device used to pay for travel on a public
transportation authority system, or (iii) prepaid telephone calling
cards regulated under section ninety-two-f of the public service law.
Gift certificate also shall not include flexible spending arrangements
as defined in Section 106(c)(2) of the Internal Revenue Code, 26 U.S.C.
§ 106(c)(2); flexible spending accounts subject to Section 125 of the
Internal Revenue Code, 26 U.S.C. § 125; Archer MSAs as defined in
Section 220(d) of the Internal Revenue Code, 26 U.S.C. § 220(d);
dependent care reimbursement accounts subject to Section 129 of the
Internal Revenue Code, 26 U.S.C. § 129; health savings accounts subject
to Section 223(d) of the Internal Revenue Code, 26 U.S.C. § 223(d), as
amended by Section 1201 of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, Pub. L. No. 108-173; or similar accounts
from which, under the Internal Revenue Code and its implementing
regulations, individuals may pay medical expenses, health care expenses,
dependent care expenses, or similar expenses on a pretax basis. Gift
certificate also shall not include a prepaid discount card or program
used to purchase identified goods or services at a price or percentage
below the normal and customary price; provided that any expiration date
of the prepaid discount card or program is clearly and conspicuously
disclosed. Gift certificate also shall not include payroll cards or
other electronic payment devices which are linked to a deposit account
and which are given in exchange for goods or services rendered.

* NB Effective December 10, 2022

1-a. No person, firm, partnership, association or corporation who or
which issues gift certificates or store credits, or who or which
conducts a "closing out sale" or "defunct business sale" as such terms
are defined in section five hundred eighty-one of this chapter, of the
merchandise of any such person, firm, partnership, association or
corporation, shall refuse to accept such gift certificate or store
credit in payment for goods or services used or bought for use primarily
for personal, family or household purposes, including, but not limited
to, goods or services advertised on sale or pursuant to a liquidation or
close-out, provided that if the certificates or the terms of the store
credits limit the period of time during which they may be used, they are
presented for redemption before the expiration of such period of time.

2. No person, firm, partnership, association or corporation who or
which issues gift certificates or store credits, or who or which
conducts a "closing out sale" or "defunct business sale" as such terms
are defined in section five hundred eighty-one of this chapter, shall in
any manner restrict the holder of a gift certificate or store credit
from electing use of such gift certificate or store credit in a manner
not inconsistent with stated terms of such gift certificate or store
credit, nor shall any person, firm, partnership, association or
corporation who or which issues gift certificates or store credits, or
who or which conducts a "closing out sale" or "defunct business sale" as
such terms are defined in section five hundred eighty-one of this
chapter, alter the term of a gift certificate or store credit after it
has been issued.

2-a. (a) The terms and conditions of a gift certificate shall be
disclosed to the purchaser:

(i) on a sign conspicuously posted stating "TERMS AND CONDITIONS ARE
APPLIED TO GIFT CERTIFICATES/GIFT CARDS"; or (ii) conspicuously stated
in an offer made by mail thus: "TERMS AND CONDITIONS ARE APPLIED TO GIFT
CERTIFICATES/GIFT CARDS".

(b) For purchases via electronic, computer, or telephonic means, the
statement "TERMS AND CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT
CARDS" shall be stated prior to the customer's purchase of the gift
certificate or conspicuously written within the electronic message
offering a gift certificate for purchase.

(c) All advertisements or promotions for gift certificates shall
include a notice in like or similar term to the following: "TERMS AND
CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT CARDS".

* 3. The terms and conditions of a gift certificate store credit shall
be clearly and conspicuously stated thereon. Terms and conditions shall
include the expiration date, whether any fees are assessed against the
balance of the gift certificate, and whether a fee will be charged for
the replacement of a gift certificate that is lost, stolen, or
destroyed, if any. Additional terms and conditions including, but not
limited to, policies related to refunds, warranties, changes in terms
and conditions, the procedure for the replacement of a gift certificate,
if any, assignment and waiver shall be conspicuously printed: (a) on the
gift certificate; or (b) on an envelope or packaging containing the gift
certificate, provided that a toll free telephone number to access the
additional terms and conditions is printed on the gift certificate; or
(c) on an accompanying document, provided that a toll free telephone
number to access the additional terms and conditions is printed on the
gift certificate.

* NB Effective until December 10, 2022

* 3. The terms and conditions of a gift certificate store credit shall
be clearly and conspicuously stated thereon. Terms and conditions
including, but not limited to, policies related to refunds, warranties,
changes in terms and conditions, the expiration date, if any, the
activation fee, if any, the procedure for the replacement of a gift
certificate, if any, assignment and waiver shall be conspicuously
printed: (a) on the gift certificate; or (b) on an envelope or packaging
containing the gift certificate, provided that a toll free telephone
number to access the additional terms and conditions is printed on the
gift certificate; or (c) on an accompanying document, provided that a
toll free telephone number to access the additional terms and conditions
is printed on the gift certificate.

* NB Effective December 10, 2022

3-a. The requirements of subdivisions two-a and three of this section
shall not apply to a gift certificate that has no terms and conditions.

3-b. Subparagraph (i) of paragraph (a) of subdivision two-a and
subdivision five-a of this section shall not apply to gift certificates:

(a) sold below face value or at a volume discount to employees, to
nonprofit and charitable organizations, or educational institutions for
fundraising purposes; or

(b) distributed to a consumer or employee pursuant to an awards,
rewards, loyalty, or promotional program without any consideration being
given in exchange for the gift certificate by the consumer or employee.

3-c. Nothing in this section shall be construed to prevent unclaimed
funds related to gift certificates from becoming abandoned under section
thirteen hundred fifteen of the abandoned property law.

4. Whenever there shall be a violation of this section, an application
may be made by the attorney general in the name of the people of the
state of New York to a court or justice having jurisdiction by a special
proceeding to issue an injunction, and upon notice to the defendant of
not less than five days, to enjoin and restrain the continuance of such
violations; and if it shall appear to the satisfaction of the court or
justice that the defendant has, in fact, violated this section, an
injunction may be issued by such court or justice, enjoining and
restraining any further violation, without requiring proof that any
person has, in fact, been injured or damaged thereby. In any such
proceeding, the court may make allowances to the attorney general as
provided in paragraph six of subdivision (a) of section eighty-three
hundred three of the civil practice law and rules and direct
restitution. Whenever the court shall determine that a violation of this
section has occurred, the court may impose a civil penalty of not more
than one thousand dollars for such violation. In connection with any
such application, the attorney general is authorized to take proof and
make a determination of the relevant facts and to issue subpoenas in
accordance with the civil practice law and rules.

* 5. (a) No retroactive fees shall be assessed against a gift
certificate.

(b) No monthly service fees may be assessed against the balance of a
gift certificate prior to the twenty-fifth month of dormancy.

(c) A service fee may be assessed after the twenty-fourth month of
dormancy provided that any such fee shall be waived and the gift
certificate replenished to its value prior to such fees being assessed
where the holder of such gift certificate presents the certificate
within three years of issue.

(d) For the purposes of this subdivision, "dormancy" shall mean
non-use of a gift certificate. Use of a gift certificate shall include,
but not be limited to, adding value, or purchases.

* NB Effective until December 10, 2022

* 5. (a) No person, firm, partnership, association or corporation
shall charge or assess, or sell or issue any gift certificate subject
to, any activation fee, retroactive fee, redemption fee, service fee,
dormancy fee, latency fee, administrative fee, handling fee, access fee,
periodic fee, renewal fee, re-loading fee, or any other fee of any kind,
other than an open loop gift certificate subject to an initial one-time
activation or issuance fee reasonably related to the cost of the issuer
issuing the open loop gift certificate and which shall in no event be in
excess of nine dollars.

(b) No person, firm, partnership, association or corporation shall
sell a gift certificate that has a face value or balance that declines
as a result of the passage of time or the dormancy of the gift
certificate.

(c) For the purposes of this subdivision, "dormancy" shall mean
non-use of a gift certificate. Use of a gift certificate shall include,
but not be limited to, adding value, or purchases.

* NB Effective December 10, 2022

* 5-a. It shall be unlawful for any person to sell or issue a gift
certificate where the underlying funds are subject to an expiration date
which is earlier than five years after the date on which the gift
certificate was issued, or the date on which funds were last loaded to a
store gift card. The terms of expiration shall be clearly and
conspicuously stated on the gift certificate.

* NB Effective until December 10, 2022

* 5-a. It shall be unlawful for any person to sell or issue a gift
certificate other than a promotional gift certificate where the
underlying funds are subject to an expiration date, provided that a gift
certificate may be subject to an expiration date which is not earlier
than the later of nine years after the date on which the gift
certificate was issued, or the date on which funds were last loaded. The
terms of expiration of a gift certificate, if any, shall be clearly and
conspicuously stated on such gift certificate.

* NB Effective December 10, 2022

* 5-b. A gift certificate, other than an open loop gift certificate or
a promotional gift certificate, with a remaining value of less than five
dollars may be redeemed upon request for its cash value.

* NB Effective December 10, 2022

6. The provisions of this section shall be exclusive and shall preempt
any provisions of local law, ordinance or code, and no locality shall
impose requirements that are inconsistent with or more restrictive than
those set forth in this section.