New York S 9900: Enacts the New York gift certificate scam prevention act

Bill Text

STATE OF NEW YORK
________________________________________________________________________
9900
IN SENATE
September 4, 2024
___________
Introduced by Sen. KRUEGER -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
AN ACT to amend the general business law, in relation to enacting the
"New York gift certificate scam prevention act"
The People of the State of New York, represented in Senate and Assem-
bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "New York gift certificate scam prevention act".
3 § 2. Paragraph (a) of subdivision 1 of section 396-i of the general
4 business law, as amended by chapter 668 of the laws of 2021, is amended
5 to read as follows:
6 (a) For the purposes of this section, the following terms shall have
7 the following meanings:
8 (1) "gift certificate" shall mean [a certificate, electronic card, or
9 other pre-funded record that: (i) is usable at a single merchant or an
10 affiliated group of merchants that share the same name, mark, or logo,
11 or is usable at multiple, unaffiliated merchants or service providers;
12 and (ii) is issued in a specified amount; and (iii) may or may not be
13 increased in value or reloaded; and (iv) is purchased and/or loaded on a
14 prepaid basis for the future purchase or delivery of any goods or
15 ] services; and (v) is honored upon presentation an open loop gift
16 ;certificate or a closed loop gift certificate
17 (2) "open loop gift certificate" shall mean a gift certificate redeem-
18 able at multiple, unaffiliated merchants or service providers; [ ]and
19 (3) "closed loop gift certificate" shall mean a card, code, or device
20 that is:
21 (i) issued to a consumer on a prepaid basis primarily for personal,
22 family, or household purposes in a specified amount, regardless of
23 whether such amount may be increased or reloaded in exchange for
24 payment; and
25 (ii) redeemable on presentation by a consumer at a single merchant or
26 a group of affiliated merchants.
27 "promotional gift certificate" shall mean a gift certificate(4)
28 issued for no consideration which includes on the front of the gift
EXPLANATION--Matter in (underscored) is new; matter in bracketsitalics
[ ] is old law to be omitted.
LBD16004-02-4

S. 9900 2
1 certificate (i) a statement indicating that the card is issued for
2 promotional purposes and (ii) the expiration date for the underlying
3 funds; and
4 (5) "third-party gift certificate reseller" shall mean a merchant who,
5 without authorization from or affiliation with the business entity issu-
6 ing an open loop gift certificate, is engaged in the business of buying
7 open loop gift certificates or reselling open loop gift certificates to
8 .consumers
9 § 3. Subdivisions 4, 5, 5-a, 5-b and 6 of section 396-i of the general
10 business law are renumbered subdivisions 5, 6, 7, 8 and 9, and a new
11 subdivision 4 is added to read as follows:
12 4. (a) For an in-person sale of a gift certificate, such gift certif-
13 icate shall be enclosed in secure packaging that:
14 (i) is sealed in a manner that is not easily opened without signs of
15 tampering;
16 (ii) except as otherwise provided in subparagraph (iii) of this para-
17 graph, conceals all numeric codes specific to the activation or the
18 redemption of such gift certificate, including but not limited to, bar
19 codes, CVV numbers, PIN numbers, and activation codes;
20 (iii) displays an activation code, bar code, or other activation date
21 only if the packaging used is more secure than it otherwise would be if
22 the data were fully concealed; and
23 (iv) includes the following warning or a substantially similar warning
24 that states the following language: "DO NOT SELL OR PURCHASE IF PACKAG-
25 ING HAS BEEN BROKEN OR INDICATES TAMPERING".
26 (b) A merchant may sell a gift certificate that is not enclosed in
27 secure packaging as required under paragraph (a) of this subdivision if
28 (i) such gift certificate is a chip-enabled, numberless card that is
29 activated by a consumer after registering such gift certificate on the
30 issuer's website; or (ii) such gift certificate is sold exclusively by
31 such merchant or a group of affiliated merchants for use only at the
32 retail establishments of such merchant or affiliated merchants and is
33 secured in a physical location within such merchant's retail establish-
34 ment that is accessible only by an employee of such merchant.
35 (c) A merchant that displays a gift certificate for sale at a retail
36 establishment shall provide training to all employees of such merchant
37 whose duties regularly include the sale of open loop gift certificates
38 and/or closed loop gift certificates to consumers on how to identify and
39 respond to gift certificate scams.
40 (d) (i) Subject to the provisions of subparagraph (ii) of this para-
41 graph, when a third-party gift certificate reseller sells an open loop
42 gift certificate as par