AN ACT CONCERNING GIFT CERTIFICATES AND ESTABLISHING A RETAIL GIFT CARD AND CERTIFICATE GUARANTY FUND.

AN ACT CONCERNING GIFT CERTIFICATES AND ESTABLISHING A RETAIL GIFT CARD AND CERTIFICATE GUARANTY FUND.

This bill (1) establishes the Connecticut Retail Gift Card and Certificate Guaranty Fund, (2) imposes an annual $ 25 fee to pay for the fund, and (3) authorizes the Department of Consumer Protection (DCP) to administer the fund and applications to it.

The bill also (1) amends the definition of gift certificates to include a record evidencing a promise donated to a charitable organization; (2) prohibits the sale of gift cards or certificates with dormancy, escheat, or inactivity charges, fees, or penalties; and (3) requires gift certificates not subject to state law to contain clear and conspicuous descriptions of any expirations, charges, fees, or penalties.

EFFECTIVE DATE: October 1, 2009, except for the sections relating to gift certificate definitions and prohibitions, which are effective July 1, 2009.

Any owner of a retail establishment selling goods, food, or services to the public who issues, or intends to issue, gift cards or gift certificates for more than $ 5,000 in total per year must pay an annual fee of $ 25, apparently per location, to the Connecticut Retail Gift Card and Certificate Guaranty Fund, up to a total of $ 1,000 per calendar year. Issuing the gift cards without paying to the fund is an unfair trade practice (see BACKGROUND).

DCP is authorized to assess a reduced fee if the balance of the fund exceeds $ 500,000 on the July 1 immediately preceding the due date of the fee. To determine the reduced fee, DCP must consider the amount necessary to meet reasonable anticipated disbursements, less reimbursements and fee revenue, while maintaining a $ 500,000 balance minimum. Money in the fund may be invested or reinvested in the same manner as funds in the state employees retirement system. The interest derived from the investments must be credited to the fund.

When a retail establishment is no longer in business at the location where the gift certificate was issued, certificate holders may apply to DCP for payment from the fund. Applications must include (1) the name and address of the retail establishment, (2) the amount of the gift card or gift certificate, and (3) other required information. No application will be accepted more than six months after the closing of the location that issued the gift card or certificate. DCP may hold a hearing on applications and issue a final decision as a contested case under the provisions of the Uniform Administrative Procedure Act (UAPA). DCP may hear all buyers submitting claims against a retail establishment in one proceeding. The commissioner is also authorized to adopt regulations under the UAPA.

The total payable compensation per establishment cannot exceed $ 75,000. DCP may order payments on claims to be less than the actual loss incurred. Once any amount of a claim has been paid, DCP is subrogated to (or substituted in place of the holder) all rights up to the amount paid and the holder assigns all rights, title, and interest in the claim to DCP. Any amount or interest then recovered by DCP must be deposited in the fund. DCP may be reimbursed up to $ 50,000 annually from the fund for its administrative costs.

The bill expands the restrictions on gift cards to prohibit the sale of, issuance of, or agreement with respect to a gift card subject to dormancy, escheat, or inactivity charges, penalties, or fees. An inactivity fee is a deduction against the gift certificate balance when the balance or any portion of it has not been spent within a specified time.

The bill also requires sellers of gift certificates backed by federal banks (and not subject to state law) to provide a clear and conspicuous description on the gift certificate or on an affixed label of any expiration date, dormancy, escheat, or inactivity fee or charge.

A violation of the provisions related to gift card fees is an unfair trade practice.

The law defines “gift certificate” as a record evidencing a promise, made for consideration, by the seller or issuer of the record that goods or services will be provided to the owner of the record to the value shown in the record. It includes (1) a record that contains a microprocessor chip, magnetic strip, or other means to store information that is pre-funded and for which an amount is deducted from the stored value upon each use; (2) a gift card; (3) a stored-value card or certificate; (4) a store card; or (5) a similar record or card. It does not include prepaid calling cards or prepaid commercial mobile radio services (CGS § 3-56a (5)).

The law prohibits businesses from engaging in unfair and deceptive acts or practices. CUTPA allows the DCP commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $ 5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. The act also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorneys fees; and impose civil penalties of up to $ 5,000 for willful violations and $ 25,000 for violation of a restraining order.

Yea

Nay

(03/10/2009)