N.Y. GBS Law § 396-I — New York Code / Act GBS / Article 26 / Section 396-I
Acceptance of unexpired gift certificates
Status: in_force

§ 396-i. Acceptance of unexpired gift certificates.  1. (a) For the\npurposes of this section, the following terms shall have the following\nmeanings:\n  (1) "gift certificate" shall mean a certificate, electronic card, or\nother pre-funded record that: (i) is usable at a single merchant or an\naffiliated group of merchants that share the same name, mark, or logo,\nor is usable at multiple, unaffiliated merchants or service providers;\nand (ii) is issued in a specified amount; and (iii) may or may not be\nincreased in value or reloaded; and (iv) is purchased and/or loaded on a\nprepaid basis for the future purchase or delivery of any goods or\nservices; and (v) is honored upon presentation;\n  (2) "open loop gift certificate" shall mean a gift certificate\nredeemable at multiple, unaffiliated merchants or service providers; and\n  (3) "promotional gift certificate" shall mean a gift certificate\nissued for no consideration which includes on the front of the gift\ncertificate (i) a statement indicating that the card is issued for\npromotional purposes and (ii) the expiration date for the underlying\nfunds.\n  (b) Gift certificate shall not include (i) an electronic payment\ndevice linked to a deposit account or which is covered by the exclusion\nset forth in 15 U.S.C. § 1693 L-1(a)(2)(D)(ii), (ii) a fare payment card\nor electronic payment device used to pay for travel on a public\ntransportation authority system, or (iii) prepaid telephone calling\ncards regulated under section ninety-two-f of the public service law.\nGift certificate also shall not include flexible spending arrangements\nas defined in Section 106(c)(2) of the Internal Revenue Code, 26 U.S.C.\n§ 106(c)(2); flexible spending accounts subject to Section 125 of the\nInternal Revenue Code, 26 U.S.C. § 125; Archer MSAs as defined in\nSection 220(d) of the Internal Revenue Code, 26 U.S.C. § 220(d);\ndependent care reimbursement accounts subject to Section 129 of the\nInternal Revenue Code, 26 U.S.C. § 129; health savings accounts subject\nto Section 223(d) of the Internal Revenue Code, 26 U.S.C. § 223(d), as\namended by Section 1201 of the Medicare Prescription Drug, Improvement,\nand Modernization Act of 2003, Pub. L. No. 108-173; or similar accounts\nfrom which, under the Internal Revenue Code and its implementing\nregulations, individuals may pay medical expenses, health care expenses,\ndependent care expenses, or similar expenses on a pretax basis. Gift\ncertificate also shall not include a prepaid discount card or program\nused to purchase identified goods or services at a price or percentage\nbelow the normal and customary price; provided that any expiration date\nof the prepaid discount card or program is clearly and conspicuously\ndisclosed. Gift certificate also shall not include payroll cards or\nother electronic payment devices which are linked to a deposit account\nand which are given in exchange for goods or services rendered.\n  1-a. No person, firm, partnership, association or corporation who or\nwhich issues gift certificates or store credits, or who or which\nconducts a "closing out sale" or "defunct business sale" as such terms\nare defined in section five hundred eighty-one of this chapter, of the\nmerchandise of any such person, firm, partnership, association or\ncorporation, shall refuse to accept such gift certificate or store\ncredit in payment for goods or services used or bought for use primarily\nfor personal, family or household purposes, including, but not limited\nto, goods or services advertised on sale or pursuant to a liquidation or\nclose-out, provided that if the certificates or the terms of the store\ncredits limit the period of time during which they may be used, they are\npresented for redemption before the expiration of such period of time.\n  2. No person, firm, partnership, association or corporation who or\nwhich issues gift certificates or store credits, or who or which\nconducts a "closing out sale" or "defunct business sale" as such terms\nare defined in section five hundred eighty-one of this chapter, shall in\nany manner restrict the holder of a gift certificate or store credit\nfrom electing use of such gift certificate or store credit in a manner\nnot inconsistent with stated terms of such gift certificate or store\ncredit, nor shall any person, firm, partnership, association or\ncorporation who or which issues gift certificates or store credits, or\nwho or which conducts a "closing out sale" or "defunct business sale" as\nsuch terms are defined in section five hundred eighty-one of this\nchapter, alter the term of a gift certificate or store credit after it\nhas been issued.\n  2-a. (a) The terms and conditions of a gift certificate shall be\ndisclosed to the purchaser:\n  (i) on a sign conspicuously posted stating "TERMS AND CONDITIONS ARE\nAPPLIED TO GIFT CERTIFICATES/GIFT CARDS"; or (ii) conspicuously stated\nin an offer made by mail thus: "TERMS AND CONDITIONS ARE APPLIED TO GIFT\nCERTIFICATES/GIFT CARDS".\n  (b) For purchases via electronic, computer, or telephonic means, the\nstatement "TERMS AND CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT\nCARDS" shall be stated prior to the customer's purchase of the gift\ncertificate or conspicuously written within the electronic message\noffering a gift certificate for purchase.\n  (c) All advertisements or promotions for gift certificates shall\ninclude a notice in like or similar term to the following: "TERMS AND\nCONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT CARDS".\n  2-b. (a) No person, firm, partnership, association or corporation\nshall sell a gift certificate to a purchaser unless the seller displays\na conspicuous notice at or near where the gift certificate is displayed\nor at or near the physical location where the sale occurs, that (i)\ncautions the purchaser about prepaid card scams, and (ii) instructs the\npurchaser on what to do if they suspect they might be a potential victim\nof such a scam.\n  (b) The consumer protection division, as established in section\nninety-four-a of the executive law, shall create a model notice which\nsellers may use to comply with the requirements of this section and\nshall make such notice accessible to sellers including, but not limited\nto, posting such notice on the consumer protection division's website in\na format available for sellers to print and display.\n  3. The terms and conditions of a gift certificate store credit shall\nbe clearly and conspicuously stated thereon. Terms and conditions\nincluding, but not limited to, policies related to refunds, warranties,\nchanges in terms and conditions, the expiration date, if any, the\nactivation fee, if any, the procedure for the replacement of a gift\ncertificate, if any, assignment and waiver shall be conspicuously\nprinted: (a) on the gift certificate; or (b) on an envelope or packaging\ncontaining the gift certificate, provided that a toll free telephone\nnumber to access the additional terms and conditions is printed on the\ngift certificate; or (c) on an accompanying document, provided that a\ntoll free telephone number to access the additional terms and conditions\nis printed on the gift certificate.\n  3-a. The requirements of subdivisions two-a and three of this section\nshall not apply to a gift certificate that has no terms and conditions.\n  3-b. Subparagraph (i) of paragraph (a) of subdivision two-a and\nsubdivision five-a of this section shall not apply to gift certificates:\n  (a) sold below face value or at a volume discount to employees, to\nnonprofit and charitable organizations, or educational institutions for\nfundraising purposes; or\n  (b) distributed to a consumer or employee pursuant to an awards,\nrewards, loyalty, or promotional program without any consideration being\ngiven in exchange for the gift certificate by the consumer or employee.\n  3-c. Nothing in this section shall be construed to prevent unclaimed\nfunds related to gift certificates from becoming abandoned under section\nthirteen hundred fifteen of the abandoned property law.\n  4. Whenever there shall be a violation of this section, an application\nmay be made by the attorney general in the name of the people of the\nstate of New York to a court or justice having jurisdiction by a special\nproceeding to issue an injunction, and upon notice to the defendant of\nnot less than five days, to enjoin and restrain the continuance of such\nviolations; and if it shall appear to the satisfaction of the court or\njustice that the defendant has, in fact, violated this section, an\ninjunction may be issued by such court or justice, enjoining and\nrestraining any further violation, without requiring proof that any\nperson has, in fact, been injured or damaged thereby. In any such\nproceeding, the court may make allowances to the attorney general as\nprovided in paragraph six of subdivision (a) of section eighty-three\nhundred three of the civil practice law and rules and direct\nrestitution. Whenever the court shall determine that a violation of this\nsection has occurred, the court may impose a civil penalty of not more\nthan one thousand dollars for such violation. In connection with any\nsuch application, the attorney general is authorized to take proof and\nmake a determination of the relevant facts and to issue subpoenas in\naccordance with the civil practice law and rules.\n  5. (a) No person, firm, partnership, association or corporation shall\ncharge or assess, or sell or issue any gift certificate subject to, any\nactivation fee, retroactive fee, redemption fee, service fee, dormancy\nfee, latency fee, administrative fee, handling fee, access fee, periodic\nfee, renewal fee, re-loading fee, or any other fee of any kind, other\nthan an open loop gift certificate subject to an initial one-time\nactivation or issuance fee reasonably related to the cost of the issuer\nissuing the open loop gift certificate and which shall in no event be in\nexcess of nine dollars.\n  (b) No person, firm, partnership, association or corporation shall\nsell a gift certificate that has a face value or balance that declines\nas a result of the passage of time or the dormancy of the gift\ncertificate.\n  (c) For the purposes of this subdivision, "dormancy" shall mean\nnon-use of a gift certificate. Use of a gift certificate shall include,\nbut not be limited to, adding value, or purchases.\n  5-a. It shall be unlawful for any person to sell or issue a gift\ncertificate other than a promotional gift certificate where the\nunderlying funds are subject to an expiration date, provided that a gift\ncertificate may be subject to an expiration date which is not earlier\nthan the later of nine years after the date on which the gift\ncertificate was issued, or the date on which funds were last loaded. The\nterms of expiration of a gift certificate, if any, shall be clearly and\nconspicuously stated on such gift certificate.\n  5-b. A gift certificate, other than an open loop gift certificate or a\npromotional gift certificate, with a remaining value of less than five\ndollars may be redeemed upon request for its cash value.\n  6. The provisions of this section shall be exclusive and shall preempt\nany provisions of local law, ordinance or code, and no locality shall\nimpose requirements that are inconsistent with or more restrictive than\nthose set forth in this section.\n