1. The Laws of New York
  2. Consolidated Laws
  3. Personal Property
  4. Article 10: Retail Instalment Sales Act


Section 402-A Merchandise certificates and obligations therefor

Personal Property (PEP)

1. A retail seller may issue merchandise certificates to a retail buyer, to be paid for in instalments and to be used solely in exchange for goods and services with a cash sale price in the face amount of such certificates and not redeemable in cash, pursuant to a document executed by the parties as hereinafter provided, which document, notwithstanding the definition of obligations contained in subdivision seven of section four hundred one, shall constitute a retail instalment obligation for the purpose of this article, shall contain the entire agreement of the parties, and shall be subject to all of the provisions of sections four hundred three to four hundred twelve, inclusive, except the provisions of the second sentence of section four hundred five.

  2. On each issue of merchandise certificates, the document evidencing the obligation therefor shall set forth a legend as provided in paragraph (a) of subdivision two of section four hundred two, a notice to the buyer as provided in paragraph (b) of subdivision two of section four hundred two, the names of the seller and the buyer, the residence or place of business of the buyer as specified by the buyer, the face amount of the merchandise certificates issued, and all items required to be disclosed by the act of congress entitled "Truth in Lending Act" and the regulations thereunder, as such act and regulations may from time to time be amended.

  3. A seller may, in such a document, contract for and, if so contracted for charge, receive and collect a credit service charge at rates not exceeding those provided under section four hundred four of this article. Such credit service charge shall be computed on the face amount of merchandise certificates issued to the buyer, less down-payment, if any.

  4. The buyer shall have the right to return to the seller at any time all merchandise certificates which have not been exchanged for goods and services, and the seller shall thereupon credit the buyer with the full face amount of such unused merchandise certificates returned and the amount of the pro rata credit service charge thereon, which shall be computed as of the date of issuance of the merchandise certificates so returned. Where the amount of the refund of such credit charge is less than one dollar no refund need be made.

  5. (a) Merchandise certificates issued under this section or the cover of the booklet in which they are bound, shall bear:

  (i) A legend in at least eight-point bold type stating that the buyer may return unused merchandise certificates so purchased at any time and that the seller will give the buyer credit for the full face amount of any certificates so returned and credit for the pro rata credit service charge if the same is one dollar or more;

  (ii) A legend in at least eight point bold type reading substantially as follows: If you wish to purchase, with merchandise certificates a single item of goods or services of greater value than the merchandise certificates you now hold, you may save credit service charge by returning your unused merchandise certificates for credit and purchasing new certificates; and

  (iii) In the event the statements required by subparagraphs (i) and (ii) hereof are set forth on the cover of a booklet in which the merchandise certificates are bound, each certificate shall bear a notice, "NOT GOOD IF DETACHED".

  (b) If a retail seller issues merchandise gift certificates to a retail buyer to be paid for in instalments (1) in good faith, and (2) in reliance upon a retail buyers statement that the buyer intends to transfer it to another as a gift, then such certificate need not set forth the legends required by subparagraphs (i) and (ii) above; provided the certificate shall bear the legend "GIFT CERTIFICATE" and the seller shall give the buyer at the time of issuance of such certificate a statement, or facsimile of such certificate, which shall identify such certificate, and shall contain the legend required by subparagraphs (i) and (ii) above.

  6. Notwithstanding the provisions of subdivision three of section four hundred three of this article, the buyer shall have the right to return to the holder of a retail instalment obligation executed on or after October first, nineteen hundred sixty-two, for merchandise certificates, at any time all merchandise certificates which have not been exchanged for goods and services, and the holder shall thereupon credit to the obligation to the extent of the amount owing by the buyer thereon the full face amount of such unused merchandise certificates returned and the amount of the pro rata credit service charge thereon, which shall be computed as of the date of issuance of the merchandise certificates so returned. Where the amount of the refund of such credit service charge is less than one dollar no refund need be made.