Legislature(2007 - 2008)BELTZ 211
04/03/2007 01:30 PM LABOR & COMMERCE
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 115-GIFT CARDS CHAIR ELLIS announced SB 115 to be up for consideration. MARIT CARLSON-VAN DORT, staff to Senator McGuire, sponsor of SB 115, explained this bill was crafted in response to a dramatic increase in consumer demand for gift options and increasing consumer frustration with hidden or poorly disclosed fees and restrictions. She said in the last few years, several states have begun to adopt measures to limit or restrict expiration dates and fees associated with these gift cards. This bill will insure gift cards that are purchased will retain their full purchase value in perpetuity and will not be subject to a variety of fees such as dormancy, latency, administrative and periodic fees - any fee that will have the effect of reducing the total amount for which the holder may redeem the card. The bill excludes gift cards that are issued under an awards, loyalty or promotional program that is donated to a non-profit or a charitable organization or a card that is used to purchase gifts or services through numerous sellers or vendors. This bill also excludes bank-issued gift cards and telephone cards. In addition, she said, gift cards that are issued in the ordinary course of an issuer' business that remain unclaimed by the owner for more than three years are presumed abandoned and may be subject to reporting to the State of Alaska Department of Revenue as unclaimed property. 2:05:55 PM SENATOR STEVENS asked where they stand on the perpetuity issue. MS. VAN DORT replied that "in perpetuity" was left in the bill, because the sponsor and committee both felt that subjecting it to the unclaimed property reporting requirement provided a "nice balance" for consumers and for businesses. The business can get it off their books and the consumer can still go to the state for a redemption. 2:06:17 PM SENATOR STEVENS asked if the state receives something eventually for handling unclaimed property. How asked how it works. 2:06:32 PM MS. VAN DORT replied if the issuer of the gift card reported the balance of the gift to the state as unclaimed property, a consumer could click on the Department of Revenue's website and find it and the state would send him a check for the value of the gift card. If it was not reported, his other option would be to go directly to the vendor of the card. 2:07:27 PM SENATOR STEVENS said at some point the state might have to balance with the vendor. MS. VAN DORT replied that one would receive the value of the gift card from the State of Alaska if the vendor qualified and reported it. CHAIR ELLIS asked how this bill is similar to the bill introduced by Representative Gardner. MS. VAN DORT replied that it is identical to Representative Gatto's legislation and Representative Gardner was a co-sponsor. 2:09:20 PM RACHAEL LEWIS, Unclaimed Property Administrator, Department of Revenue (DOR), gave the committee an overview of her department's duties. She explained that in 1986 Alaska adopted the Uniform Unclaimed Property Act. This means that any uncashed payroll check, any uncashed health insurance reimbursement check, stocks, bonds, bank accounts that have inactivity for certain periods of time, rather than the business retaining that money, it turns it over to the State of Alaska that acts as the custodian. "We never take full title. We just hold it in perpetuity 'til an owner or their heir comes forward." MS. LEWIS said that gift cards and certificates are already in the Act. This bill doesn't really change that; but it adds definitions to the Unfair Trade Practices. She found that people do not realize how much money adds up from just small uncashed payroll checks. Since 1986, $88 million has been turned over as unclaimed property. She has returned $23 million of unclaimed property to people in Alaska and about $56 million has been put into the general fund because it's an excess she doesn't believe the owners will come forward to claim. So, they return about 30 percent and all Alaskans get to benefit from the state acting as custodian. 2:11:26 PM CHAIR ELLIS asked what efforts the department went through to contact people to claim property. MS. LEWIS replied that the department make efforts annually and pools its searchable database with 38 other states. She doesn't advertise in newspapers any more, because it costs $33,000 in Alaska to advertise 1,100 claims. They list seven times the claims on the Internet for free. 2:13:05 PM SENATOR STEVENS asked what dollar amount they are talking about in gift cards. 2:13:36 PM MS. LEWIS replied that she is holding about $56,000 in gift cards and certificates for 1,000 Alaskans. Last year an estimated $58 billion worth of gift cards were sold nationwide and 5 - 10 percent of those became unclaimed, lost or not redeemed. CHAIR ELLIS asked if passing the bill would be a net gain or a net drain for her office. MS. LEWIS replied it would be good public policy. 2:14:54 PM MS. VAN DORT returned to the table and the chair asked her who else had weighed in. MS. VAN DORT replied no one. CHAIR ELLIS asked her to contact Alaska Public Interest Research Group (AKPIRG) and other consumer groups for their opinions. MS. VAN DORT added that she had a conversation with Mr. Glen Peterson, District Manager of Carrs/Safeway, who expressed support. His one concern was whether or not the gift cards would be redeemable for cash - language on page 3, lines 29 - 31. The drafter said the language could stand clarification, but the sponsor didn't think it took away the individual discretion of the business owner. At this time they state whether or not their certificate is redeemable at full cash value for cash or just for goods and services. Her opinion was to let it lie. 2:17:07 PM CHAIR ELLIS announced SB 115 would be held over.