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Corbett moves to expand gift-card law

By Josh Richman
Tuesday, January 26th, 2010 at 12:39 pm in California State Senate, Ellen Corbett.

Got any money left from those holiday-season gift cards? State Sen. Ellen Corbett, D-San Leandro, wants to make it easier still for you to cash them in.

Corbett today unveiled SB 885, which would increase the amount on a gift card that consumers can redeem for cash from up to $10 – the amount set by a Corbett-authored law, SB 250, effective Jan. 1, 2008 – to up to $20; a notice stating the card can be redeemed for cash when its value dips below $20 would have to be printed on the card.

Her new bill also would eliminate dormancy fees; under current law, a gift card valued $5 or less that hasn’t been used for two years can be assessed a $1-per-month fee.

“In these difficult times, consumers must have ready access to all of their assets, including unused gift cards,” Corbett said in her news release. “The remainder on their unused gift cards could make a difference in paying their bills and making ends meet. This bill will enhance consumers’ rights and increase compliance with the law.”

gift cardsNationwide, nearly $5 billion in gift cards go unspent every year. After a few years, the retailer can claim the consumer’s money as profit without supplying a product or even paying sales tax; companies have claimed up to $43 million in profit from unspent gift cards in a single year.

Consumers Union supports this bill, as it and other consumer advocacy groups did Corbett’s earlier gift-card law, saying it gives gift-card holders their due. But opponents of the earlier law including the California Restaurant Association, CTIA – The Wireless Association, the Direct Marketing Association and the National Association of Theaters Owners California/Nevada had argued giving dollar-for-dollar cash value to gift cards increases the likelihood of fraud – for example, letting stolen or fraudulently-obtained credit cards be turned into cash through the purchase of low-denomination gift cards, or through manipulation of the gift cards’ magnetic stripes. They also said it sticks retailers and restaurants with fees from the credit- or debit-card transaction in which the gift card was bought, and/or with fees small retailer might’ve paid to third-party vendors to handle gift-card preparation, tracking and redemption. Watch for these and similar groups to lobby hard against this bill, too.

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  • RR, Uninvited Columnist

    The gift card idea wasn’t intended to boost cash assets of consumers, it was intended to boost mercantile cash flow. This bill is dumb. Tell your well-wishers to send you checks instead of gift cards next Christmas. (Too bad if the check amount is smaller than the gift card’s face value)

  • TheVoice

    This is another shining example ofDems going too far. 2 years of dormancy for a card with $5 or less should get dinged a service fee, somebody has to keep accounting and bookkeeping this liability.

    To author more cash out value from $10 to $20 is also not needed. They should spend some more and add to commerce then cash out if they arer concerned or needing the cash.

    Lets target the laws to more items that are needed then waste the house sessions with this penny squabbles.

  • ClearThinker101

    Thank you Senator Corbett for your efforts to stop or reduce yet another well thought out SCAM to “redistribute wealth” from the pockets of the populace to the coffers of a small percentage of people (and the businesses they own).

    The latter can always afford to have hound dogs on retainer – who will shout, misrepresent, obfuscate, intimidate, confuse, and browbeat the general public into accepting these small wealth drains as a part of life (while they accumulate into huge wealth gains on the other side).

    And in the rare occasion when the people (via their representatives – the precious few with the necessary courage, integrity and a basic sense of justice) are able to make these refined SCAMS illegal, the businesses do all they can to reverse these small steps towards a decent society while planning on their next SCAM.

    Once again, thanks to Senator Corbett and everyone involved in keeping up the good fight.

  • http://www.icardgiftcard.com Eric Strautman

    In 2009, gift cards were the most popular holiday gift. Why? They don’t expire and they empower the recipient with choice.

    The retailer does have some significant expenses to support a gift card program for thousands or millions of consumers. One of the biggest expenses for them is maintaining the books on small, UNUSED, amounts on gift cards. These are a nuisance and tie up money that could otherwise be flowing through our economy.

    Retailers are doing us all a favor by “feeing off” those balances and using that money to reinvest in their business and hire more employees.

    Feigning “consumer protection” for a two-year-old Home Depot card in a sock drawer with $4.23 left on it is just political theatre. A comedy.

  • Elwood

    Re: Clear Thinker 101

    Your parents didn’t love you enough, did they?