Bill Text: NY S09900 | 2023-2024 | General Assembly | Introduced

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Bill Title: Enacts the "New York gift certificate scam prevention act" to require certain packaging security and record-keeping requirements for gift certificates by sellers of gift certificates.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-09-04 - REFERRED TO RULES [S09900 Detail]

Download: New_York-2023-S09900-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          9900

                    IN SENATE

                                    September 4, 2024
                                       ___________

        Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
          printed to be committed to the Committee on Rules

        AN ACT to amend the general business law, in relation  to  enacting  the
          "New York gift certificate scam prevention act"

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Short title. This act shall be known and may  be  cited  as
     2  the "New York gift certificate scam prevention act".
     3    §  2.  Paragraph  (a) of subdivision 1 of section 396-i of the general
     4  business law, as amended by chapter 668 of the laws of 2021, is  amended
     5  to read as follows:
     6    (a)  For  the purposes of this section, the following terms shall have
     7  the following meanings:
     8    (1) "gift certificate" shall mean [a certificate, electronic card,  or
     9  other  pre-funded  record that: (i) is usable at a single merchant or an
    10  affiliated group of merchants that share the same name, mark,  or  logo,
    11  or  is  usable at multiple, unaffiliated merchants or service providers;
    12  and (ii) is issued in a specified amount; and (iii) may or  may  not  be
    13  increased in value or reloaded; and (iv) is purchased and/or loaded on a
    14  prepaid  basis  for  the  future  purchase  or  delivery of any goods or
    15  services; and (v) is  honored  upon  presentation]  an  open  loop  gift
    16  certificate or a closed loop gift certificate;
    17    (2) "open loop gift certificate" shall mean a gift certificate redeem-
    18  able at multiple, unaffiliated merchants or service providers; [and]
    19    (3)  "closed loop gift certificate" shall mean a card, code, or device
    20  that is:
    21    (i) issued to a consumer on a prepaid basis  primarily  for  personal,
    22  family,  or  household  purposes  in  a  specified amount, regardless of
    23  whether such amount  may  be  increased  or  reloaded  in  exchange  for
    24  payment; and
    25    (ii)  redeemable on presentation by a consumer at a single merchant or
    26  a group of affiliated merchants.
    27    (4) "promotional gift  certificate"  shall  mean  a  gift  certificate
    28  issued  for  no  consideration  which  includes on the front of the gift

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD16004-02-4
        S. 9900                             2

     1  certificate (i) a statement indicating  that  the  card  is  issued  for
     2  promotional  purposes  and  (ii)  the expiration date for the underlying
     3  funds; and
     4    (5) "third-party gift certificate reseller" shall mean a merchant who,
     5  without authorization from or affiliation with the business entity issu-
     6  ing  an open loop gift certificate, is engaged in the business of buying
     7  open loop gift certificates or reselling open loop gift certificates  to
     8  consumers.
     9    § 3. Subdivisions 4, 5, 5-a, 5-b and 6 of section 396-i of the general
    10  business  law  are  renumbered  subdivisions 5, 6, 7, 8 and 9, and a new
    11  subdivision 4 is added to read as follows:
    12    4. (a) For an in-person sale of a gift certificate, such gift  certif-
    13  icate shall be enclosed in secure packaging that:
    14    (i)  is  sealed in a manner that is not easily opened without signs of
    15  tampering;
    16    (ii) except as otherwise provided in subparagraph (iii) of this  para-
    17  graph,  conceals  all  numeric  codes  specific to the activation or the
    18  redemption of such gift certificate, including but not limited  to,  bar
    19  codes, CVV numbers, PIN numbers, and activation codes;
    20    (iii)  displays an activation code, bar code, or other activation date
    21  only if the packaging used is more secure than it otherwise would be  if
    22  the data were fully concealed; and
    23    (iv) includes the following warning or a substantially similar warning
    24  that  states the following language: "DO NOT SELL OR PURCHASE IF PACKAG-
    25  ING HAS BEEN BROKEN OR INDICATES TAMPERING".
    26    (b) A merchant may sell a gift certificate that  is  not  enclosed  in
    27  secure  packaging as required under paragraph (a) of this subdivision if
    28  (i) such gift certificate is a chip-enabled,  numberless  card  that  is
    29  activated  by  a consumer after registering such gift certificate on the
    30  issuer's website; or (ii) such gift certificate is sold  exclusively  by
    31  such  merchant  or  a  group of affiliated merchants for use only at the
    32  retail establishments of such merchant or affiliated  merchants  and  is
    33  secured  in a physical location within such merchant's retail establish-
    34  ment that is accessible only by an employee of such merchant.
    35    (c) A merchant that displays a gift certificate for sale at  a  retail
    36  establishment  shall  provide training to all employees of such merchant
    37  whose duties regularly include the sale of open loop  gift  certificates
    38  and/or closed loop gift certificates to consumers on how to identify and
    39  respond to gift certificate scams.
    40    (d)  (i)  Subject to the provisions of subparagraph (ii) of this para-
    41  graph, when a third-party gift certificate reseller sells an  open  loop
    42  gift  certificate as part of a transaction occurring in this state, such
    43  third-party gift certificate reseller shall record and  maintain  for  a
    44  minimum of three years, a copy of the following:
    45    (1) The name of the person who conducted the transaction;
    46    (2)  The  name,  age,  and address of the seller of the open loop gift
    47  certificate;
    48    (3) The seller's and consumer's driver's license or other  identifica-
    49  tion card number;
    50    (4)  A description of the purchased open loop gift certificate includ-
    51  ing the retailer for which such open loop gift certificate  is  intended
    52  for use and such open loop gift certificate's identification number;
    53    (5) The specific amount issued on the open loop gift certificate;
    54    (6) The prices paid to conduct the transaction; and
    55    (7) The signature of the consumer.
        S. 9900                             3

     1    (ii)  (1) The information recorded and maintained under this paragraph
     2  shall be recorded chronologically in ink writing or logged into a secure
     3  database, software system, or other similar technology platform.  Except
     4  as  provided  in  clause  two of this subparagraph, recorded information
     5  made  in  ink  writing shall not be destroyed, altered, or erased within
     6  the time frame such recorded information is required to  be  kept  under
     7  subparagraph (i) of this paragraph.
     8    (2) A handwritten correction may be made to an entry of information by
     9  drawing  a line of ink through such entry in a manner that retains legi-
    10  bility. Information  recorded  under  this  section  shall  be  open  to
    11  inspection  by  any  duly authorized law enforcement officer: (A) during
    12  the ordinary business hours of the third-party gift certificate  resell-
    13  er; or (B) at any reasonable time.
    14    (3)  A  third-party  gift  certificate reseller, including an agent or
    15  employee of such third-party gift certificate reseller, shall  not:  (A)
    16  fail  to make an entry of or falsify, destroy, or remove any information
    17  required to be recorded and maintained under this section; (B) refuse to
    18  allow any duly authorized law enforcement officer to inspect a record of
    19  information or open loop  gift  certificate  in  such  third-party  gift
    20  certificate  reseller's possession during the ordinary business hours of
    21  such reseller or at any reasonable time;  or  (C)  fail  to  maintain  a
    22  record  of  each open loop gift certificate and transaction for at least
    23  three years as required under subparagraph (i) of this paragraph.
    24    § 4. This act shall take effect on the one hundred eightieth day after
    25  it shall have become a law.