Legislature(2007 - 2008)BELTZ 211
04/12/2007 01:30 PM LABOR & COMMERCE
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|Affordable Housing Issues|
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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 committee. 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 basis. 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.