Enacts the "New York gift certificate scam prevention act" to require certain sale, security and record-keeping requirements for gift certificates by sellers of gift certificates.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7916A
SPONSOR: Bores TITLE OF BILL:
An act to amend the general business law, in relation to enacting the
"New York gift certificate scam prevention act"
PURPOSE:
To increase consumer protection from fraud and scams by increasing the
safety of open loop and closed loop gift certificates sold in New York
SUMMARY OF PROVISIONS:
Section 1: This act shall be known as the "New York Gift Certificate
Scam Prevention Act
Section 2: Amends the General Business Law to update and expand certain
definitions related to open loop gift certificates, closed loop gift
certificates, and third-party gift certificate resellers.
Section 3: Creates a new subdivision 4 of section 396-1 of the General
Business Law to increase the product security of gift certificates sold
at retail stores, increase training for sellers of gift certificates,
and requires additional recording requirements for third-party gift
certificate resellers.
Section 4: Effective Date.
JUSTIFICATION:
Card draining is a scheme in which thieves remove gift cards from stores
capture their numeric codes or swap them out for counterfeit cards, and
place the products back on display. When an unsuspecting customer loads
money onto a tampered or counterfeit card, criminals access it online
and steal the balance. This results in a worthless card being purchased
by consumers, and if the consumer tries to reload the card the scammers
can take that money as well. This fraudulent scheme has cost more than
$250 million annually.
The'gift card scam prevention act requires retailers to be trained in
how to check if a gift card has been tampered with and requires that the
manufacturers of gift cards make their packaging safer for consumers and
more difficult to be used in these scams.
The bill also increases reporting and recording requirements on third
party gift certificate sellers. These sellers will need to keep a more
accurate and traceable record of gift card sales so that scammers can be
traced by law enforcement.
LEGISLATIVE HISTORY:
2023-24-S.9900 New Bill
FISCAL IMPLICATIONS:
None to the State.
EFFECTIVE DATE:
180 days after it shall become law
