ALBANY, N.Y. — Consumers would be provided with refunds for gift certificates if the issuing firm, partnership, association, or corporation closes, according to legislation introduced by Assemblyman Robert Reilly (D-I-WF/Albany).
There is currently no guarantee that a business reserve funds to repay any unclaimed amounts on gift cards after they close.
This legislation would require a business to place all funds received from gift certificates in an escrow account until the gift certificate is redeemed. Consumers would therefore be able to reclaim the value of their gift card is a business unexpectedly closes or declares bankruptcy.
The Retail Council of New York State Inc. is strongly opposed to the bill, according to Ted Potrikus, executive vice-president and director of government relations.
“This is one of those things that sounds really good on paper, but it’s impossible to render. It would be impossible to track,” said Potrikus. “If you sell a gift card in New York to somebody who lives in Massachusetts, and they take that gift card to Massachusetts—do you still have to hold the amount in escrow? How do you know when and where that particular card was redeemed, especially if it was redeemed at your store [out of state]? That’s just the start.”
“Under federal bankruptcy laws—what place does the gift card holder hold?” Potrikus continued. “Now you’re talking about federal law and whether or not this can happen. What this would come down to is, to make the simple sale of a gift card, you would have to take all kinds of information from the buyer that you don’t have to. So on one hand we’re worried about personal information, and on the other hand, we’ve got this idea that would absolutely run the cost of a customer service for small businesses to the point where it would be unaffordable.”