Legislature(2007 - 2008)BELTZ 211
03/22/2007 09:00 AM STATE AFFAIRS
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SB 115-GIFT CARDS 9:13:28 AM CHAIR MCGUIRE announced the consideration of SB 115. There is a concern in combining the term "certificate" with "gift card" and so there should be a definition of both in the bill. There also was a question about the value of a gift card remaining into perpetuity or not. 9:14:57 AM MARIT VAN DORT, Staff to Senator McGuire, said leaving the value in perpetuity strikes a nice balance between providing consumer protection and giving business owners the choice of issuing gift cards. Alaska is making money off of the unclaimed property, and there is no reason to limit it. She said Rachel Lewis noted that the law isn't being changed; gift cards are just being added. Instead of going through the Attorney General's office, a person can go to the Department of Revenue website and get the value of a gift card back if it has been reported as unclaimed property. If someone held a gift card for a long time and the business had not recorded it as unclaimed property, the person with the gift card can tell the business to honor it or threaten to report the business to the Department of Revenue. 9:17:24 AM CHAIR MCGUIRE said a business is required to report an aggregate of $750 worth of unclaimed property. The bill doesn't change that, but it includes gift cards. Whether a consumer buys a gift card or a product, "the business can choose, at that point in time, to calculate it for however they want into their profit statements. Later, if they decide, put it off the books and three years later report it as unclaimed property." If the business has reached an aggregate $750, it is required to report the unclaimed property, giving the consumer the right to get that money back. "I think that's a really nice consumer protection to have in Alaska." She noted elderly consumers, and "somebody has given their money toward that gift to you, so it still ought to have a value." This is a nationwide movement, she noted. The bill also eliminates fees and interest. Merchants have no obligation to issue gift cards, she said, but she believes they will because of the money they can make from them. 9:19:54 AM SENATOR GREEN said one store has racks of cards from different venders, so either the store receives a cut from selling the card or it must add a fee. MS. VAN DORT said unless the gift card is issued from a bank, the fees will not be allowed. SENATOR FRENCH said Carrs has $50 Nordstrom gift certificates, so there must be an agreement that Nordstrom gets $48 of those dollars, for example, and Carrs gets $2. CHAIR MCGUIRE said the two companies can make those arrangements, but the consumer won't be required to pay more. "So when you buy the $50 card at the checkout stand, you get 50 bucks worth of merchandise. What happens between Nordstrom and Carrs is not impacted by this." 9:21:40 AM SENATOR GREEN said right now a person will pay about $6.50 in fees for a $150 gift card. CHAIR MCGUIRE said the merchants will have to make that decision. She offered that it has been extremely valuable for Nordstrom and others to make gift cards available. She got a card and got the full value, she added, but the bill is necessary because of an increasing trend to tack on fees that the consumer pays. 9:23:10 AM SENATOR GREEN said the businesses should be alerted in case they want to testify. Gift cards are convenient, she stated. CHAIR MCGUIRE suggested reaching out to Carrs and Kroger and having them come and talk about the gift card structures. 9:24:21 AM MS. VAN DORT said gift certificates are defined in statute under gift cards, "so we cannot add gift certificate in there because we would have two terms meaning the same thing." CHAIR MCGUIRE said the committee sees the gift card and gift certificate differently, although they do the same thing. TERRY BANNISTER, Attorney, Legislative Affairs, said a different term, like "gift device", could be used to cover certificates and cards, but right now gift card is the main definition and it is used throughout the bill. Adding gift certificate, "we would have a separate term being used, but gift card covers it." The title uses the term gift certificate because "we're affecting gift certificates; we're changing the names and all that, and that's why I was trying to be very careful to say: oh, we're talking about gift certificates to the extent that we're kind of replacing the terminology with gift cards. So we wanted to notify everybody that we were addressing this." She said on page 1, line 5, the section title should be corrected to read gift card and credit memos, and that could be done by the revisor. "Whenever we delete something or change a term we try to evaluate whether or not we need to alert people to tell them that this has been affected." 9:27:04 AM CHAIR MCGUIRE said prior to this bill, gift certificate was defined and not gift card. "So now the question is whether you define them both separately, or whether you replace the term gift certificate with gift card, or whether we call it a gift device." SENATOR STEVENS asked how it differs from a credit memo, and he gave an example of selling something to a second-hand store in return for credit in the store. MS. BANNISTER said she will have to check the uniform act to see how credit memo is defined. She assumes that wouldn't fit, but it could be included under gift card. It seems to be a totally different item, she stated. "It is not affected by the bill; we've left it as it is." 9:29:24 AM SENATOR BUNDE said there is no simple issue that we can't convolute. The bill is focused on the new phenomena of gift cards, "and I would say that gift certificate is a distinction that doesn't make a difference." He said, "Go ahead with the card," which is electronic and is used like a credit card. Some merchants charge a fee for using a credit card, he noted. CHAIR MCGUIRE said her inclination is to keep the bill as is, but also to make the technical change. She offered Amendment 1, as follows: Page 1, line 5: Delete "certificates" Insert "cards" Hearing no objection, Amendment 1 carried. 9:31:08 AM SENATOR GREEN said she doesn't see where a gift certificate is defined under gift card. It looks like it only applies to gift cards, she stated. MS. BANNISTER said gift card is a broad definition, and it means a device-any kind of device. It could be a certificate. By its terms, the gift card definition includes gift certificates. SENATOR FRENCH said line 26 defines the device as including an electronic card but doesn't say it could be a hand-written piece of paper issued by a store. MS. BANNISTER said, "You may want to do that." The language uses the term "includes," so it is not limited to an electronic card. 9:33:17 AM CHAIR MCGUIRE suggested the following: includes a paper certificate or an electronic card. 9:34:20 AM CHAIR MCGUIRE asked about any other material that a certificate could be written on besides paper. "Should we just say certificate?" There may be another kind of material, and she noted a business card made out of metal. SENATOR FRENCH said he liked using the term "paper." MS. BANNISTER said since the language starts with "includes," it does not exclude a metal certificate. CHAIR MCGUIRE offered Amendment 2, as follows: Page 2, line 26, following "includes": Insert "a paper certificate or" Hearing no objection, Amendment 2 carried. SENATOR FRENCH moved SB 115, as amended, from committee with individual recommendations and the attached zero fiscal note. There being no objection, CSSB 115(STA) moved from the Senate State Affairs Committee.