Legislature(2007 - 2008)BELTZ 211

04/03/2007 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
Heard & Held
Bills Previously Heard/Scheduled
Moved CSSB 116(L&C) Out of Committee
                       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                                                               
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                                                               
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                                                               
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.                                                                                

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