2023 New York Laws › PEP - Personal Property › Article 10 - Retail Instalment Sales Act › 402A - Merchandise Certificates and Obligations Therefor.

§  402A.  Merchandise  certificates  and  obligations therefor.   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.