Legislature(2007 - 2008)BELTZ 211

04/12/2007 01:30 PM LABOR & COMMERCE

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Audio Topic
01:32:51 PM Start
01:33:51 PM SB115
01:36:54 PM HB34
01:38:42 PM SB117
02:29:45 PM Affordable Housing Issues
02:52:10 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Bills Previously Heard/Scheduled
Scheduled But Not Heard
Moved CSSB 115(STA) Out of Committee
Moved HB 34 Out of Committee
Overview: Affordable Housing
Dan Fauske, Executive Director of the
Alaska Housing Finance Corporation
                       SB 115-GIFT CARDS                                                                                    
1:33:51 PM                                                                                                                    
CHAIR ELLIS announced CSSB 115(STA) to be up for consideration.                                                                 
1:34:14 PM                                                                                                                    
SENATOR BUNDE joined the committee.                                                                                             
1:34:21 PM                                                                                                                    
MARIT CARLSON VAN-DORT,  staff to Senator McGuire,  sponsor of SB                                                               
115, said  there had  been no  changes to the  bill and  that the                                                               
chair  requested a  letter of  support from  AKPIRG that  she had                                                               
distributed to the committee.                                                                                                   
CHAIR ELLIS  mentioned that  some folks from  out of  state might                                                               
have some concerns and asked if she knew about them.                                                                            
MS.  VAN-DORT replied  that she  had  several conversations  this                                                               
morning  with  Mr.  Glen Peterson,  District  Manager  for  Carrs                                                               
Safeway/Alaska  who   expressed  concerns  raised   by  corporate                                                               
attorneys about Section 1 relating  to unclaimed property. It was                                                               
his intention to have one of the attorneys testify.                                                                             
1:36:15 PM                                                                                                                    
CHAIR ELLIS noted  that no one was  on line to testify  and so he                                                               
set SB 115 aside until a testifier could arrive.                                                                                
                       SB 115-GIFT CARDS                                                                                    
2:11:57 PM                                                                                                                    
CHAIR  ELLIS  announced  CSSB  115(STA) to  be  back  before  the                                                               
DAVID  DURRANT,  Blackhawk  Network and  Carrs/Safeway,  said  he                                                               
appreciated the  need for  consumer protection  in this  area and                                                               
the  efforts to  bring  greater  clarity to  the  law in  Alaska,                                                               
especially  for  the amount  presumed  to  be abandoned  on  gift                                                               
cards. He was concerned, however,  on behalf of issuers of closed                                                               
loop  distributors,  such  as retailers  like  Carrs/Safeway  and                                                               
Blackhawk, because there is a  capacity for them to escheat funds                                                               
to the state. He explained:                                                                                                     
     For example,  a $100 card  on which $50 is  used, three                                                                    
     years later  the issuer  would have  to escheat  $50 to                                                                    
     the state, but  because of the new  provision that says                                                                    
     the cards  would need  to be evergreened  - that  is to                                                                    
     say  that the  issuer would  have to  make good  on the                                                                    
     sole  face value  of that  card  whenever the  customer                                                                    
     comes back in  - be it 5  years from now or  100 - that                                                                    
     the retailer could, in essence,  have to escheat $50 to                                                                    
     the  state and  still  then  have to  make  good on  an                                                                    
     additional  $50 to  the consumer  -  in essence  paying                                                                    
     double - and  then having to come back to  the state at                                                                    
     some future date for some sort of a refund or rebate.                                                                      
     We  would ask  that the  bill be  amended to  match the                                                                    
     laws  of  states   like  Washington,  Oregon,  Arizona,                                                                    
     California, that  exempt these  evergreened closed-loop                                                                    
     cards  from abandonment  simply  because the  retailer,                                                                    
     the  issuer,  remains  in that  relationship  with  the                                                                    
     consumers, so  long as  that card  is still  capable of                                                                    
     being redeemed.                                                                                                            
     Alternatively,  if one  could  make it  such that  bill                                                                    
     exempted  those  -  I'm sorry  -  that  the  three-year                                                                    
     provision  only  applied  to   those  cards  that  were                                                                    
     exempted  from the  evergreen provision,  I think  that                                                                    
     would  have the  same  net effect  of still  protecting                                                                    
     consumers and  the retailers who  choose to  issue gift                                                                    
     cards in the state of Alaska.                                                                                              
2:14:47 PM                                                                                                                    
SENATOR STEVENS asked how many cards are normally redeemed.                                                                     
MR. DURRANT  replied that 50  percent of gift cards  are redeemed                                                               
within the first 30 days  after purchase. Ultimately, after three                                                               
years 5 - 8 percent go  unredeemed. He didn't know the percentage                                                               
of those that would never be redeemed.                                                                                          
2:15:34 PM                                                                                                                    
MARIT CARLSON VAN-DORT, staff to  Senator McGuire, responded that                                                               
this statute  is being barely amended  and has been on  the books                                                               
since  1986. She  thought it  interesting that  they were  taking                                                               
issue with this  section of the statute now.  Secondly, she would                                                               
oppose the amendment,  because it would effectively  gut the bill                                                               
- since  it extends the  value of  the gift cards  in perpetuity.                                                               
Third,  she  wondered   what  the  effect  would   really  be  on                                                               
businesses if  only about  5 -  8 percent of  gift cards  are not                                                               
redeemed after 3 years.                                                                                                         
2:16:41 PM                                                                                                                    
SENATOR BUNDE  asked if a card  can be kept alive  in perpetuity,                                                               
why  should  lawmakers  require  a   company  to  declare  it  as                                                               
unclaimed property.                                                                                                             
MS.  VAN-DORT replied  that  this  provision provides  additional                                                               
consumer  protection for  those  people who  have purchased  gift                                                               
cards in  case the business  folds. They can  go to the  state to                                                               
get their money. In terms  of paying double, business owners have                                                               
recourse as  well. They can  effectively get their money  back if                                                               
they choose to  honor a gift card that has  already been reported                                                               
as unclaimed property.                                                                                                          
2:18:14 PM                                                                                                                    
SENATOR BUNDE said  he understood where this was  going and asked                                                               
if an added cost would be passed on to the consumer.                                                                            
2:19:32 PM                                                                                                                    
SENATOR STEVENS commented  that forever is a long  time and asked                                                               
if the  value could  be capped  at a certain  point so  the books                                                               
don't need to be kept for the next 100 years.                                                                                   
MS. VAN-DORT replied the sponsor  would be open to something like                                                               
that,  but  she  noted  that all  Carrs/Safeway  gift  cards  are                                                               
without expiration dates anyway. People like that.                                                                              
2:20:33 PM                                                                                                                    
SENATOR STEVENS  asked how hard it  is for a business  to get its                                                               
money back from the state.                                                                                                      
RACHAEL LEWIS, Administrator  of Unclaimed Properties, Department                                                               
of  Revenue,  replied  that  the Unclaimed  Property  Act  has  a                                                               
section specifically  addressing holder reimbursements.  A holder                                                               
is any company that is  holding unclaimed property and has turned                                                               
it  over to  the  State  of Alaska  for  custodial purposes.  All                                                               
that's needed is either a letter  or affidavit. All states have a                                                               
standardized  form called  the "Holder  Reimbursement Form"  that                                                               
says "Yes,  we have  already made good  on this  particular item;                                                               
please  reimburse us  for  it." And  they do  that  on a  regular                                                               
2:22:05 PM                                                                                                                    
SENATOR BUNDE  asked if there is  any way to know  what a typical                                                               
request for  reimbursement from  a consumer would  be for  a card                                                               
that wasn't  honored. He was  concerned that a company  could get                                                               
"nicked" for another  $25 or $30 and they couldn't  afford to pay                                                               
staff to write to her division for that price.                                                                                  
2:22:43 PM                                                                                                                    
MS. LEWIS  replied that  a company  would not  have to  honor the                                                               
gift certificate even though it  has no expiration date; it would                                                               
just  have  to  refer  a  consumer to  the  state's  Division  of                                                               
Unclaimed  Property -  it has  a website.  Most of  the companies                                                               
honor gift cards out of  good will and customer service. However,                                                               
she  noted that  100  percent  of travelers'  checks  have to  be                                                               
holder  reimbursed.  The  statute says  "promptly  reimburse  the                                                               
holder," so they get priority.                                                                                                  
2:25:14 PM                                                                                                                    
SENATOR  STEVENS  moved to  pass  CSSB  115(STA) with  individual                                                               
recommendations  and   attached  fiscal  notes.  There   were  no                                                               
objections and it was so ordered.                                                                                               

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