Report - 2024 01 30 A31844 D267461 Bill Report 5987 Sbr Bfgt Ta 24

Summary

A Senate Bill Report on SB 5987, an act relating to improving consumer protection on gift certificates, prepared by staff of the Senate Committee on Business, Financial Services, Gaming & Trade as of January 16, 2024. The report states the bill raises the threshold for returning a gift certificate's remaining value in cash to $50 and directs issuers to let bearers combine a gift certificate with another form of payment. It notes the change applies only to gift certificates purchased after July 1, 2024, the bill's effective date, with no appropriation and no fiscal note requested. The report summarizes PRO and CON public testimony and lists the persons testifying, with Senator Yasmin Trudeau as prime sponsor. The report is three pages.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                             SENATE BILL REPORT
                                   SB 5987

                                       As of January 16, 2024

Title: An act relating to improving consumer protection on gift certificates.

Brief Description: Improving consumer protection on gift certificates.

Sponsors: Senators Trudeau, Dhingra, Conway, Frame, Hasegawa, Keiser, Kuderer, Liias,
    Nguyen, Nobles, Pedersen, Saldaña, Stanford, Valdez, Wilson, C. and Wilson, J..

Brief History:
     Committee Activity: Business, Financial Services, Gaming & Trade: 1/16/24.


                                      Brief Summary of Bill
           • Increases the threshold for returning the remaining value of a gift
             certificate that can be returned to the bearer in cash after the gift card is
             used from $5 to $50.
           • Directs the issuer of a gift certificate to allow the bearer to combine the
             value stored on a gift certificate with another form of payment to
             complete a purchase.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

     Staff: Clint McCarthy (786-7319)

     Background: A gift certificate is defined to mean a record evidencing a promise by a seller
     to provide goods or services for the value of the record. The definition of a gift certificates
     includes gift cards. In 2004, the Legislature established consumer protections in statute for
     holders of gift certificates. Among those protections included allowing the bearer of a gift
     card with a remaining balance of less than $5 to receive that amount in cash.

     Sellers of gift certificates are not required to allow the bearer of a gift certificate to combine




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                               -1-                                            SB 5987
     the value stored on the that gift certificate with another form of payment to complete a
     purchase.

     Summary of Bill: Language stating that the intent of the Legislature to relieve businesses
     from the obligation of reporting gift certificates as unclaimed property in order to protect
     consumers is removed, and replaced with language revises the intent language to declare its
     intent to prohibit acts and practices of retailers that deprive consumers of the full value of
     gift certificates. The intent of the chapter is expanded to include language declaring the
     Legislature will protect consumers by requiring companies to combine gift certificates with
     other forms of payment to make purchases and increase the dollar threshold for gift
     certificates below which companies must provide cash in exchange for the remaining
     balance.

     The threshold for returning the remaining value of a gift certificate in cash after using the
     gift card is increased from $5 to $50. The bearer of a gift certificate must be able to reload
     the gift certificate with a maximum amount set by the issuer in any dollar amount they
     choose if the gift certificate is reloadable. Issuers are required to allow gift certificates to be
     used in conjunction with another form of payment if the value of the gift certificate is less
     than the total cost of purchase.

     The change in statute is applicable only to gift certificates purchased after July 1, 2024.

     Appropriation: None.

     Fiscal Note: Not requested.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill takes effect on July 1, 2024,

     Staff Summary of Public Testimony: PRO: We all purchase gift cards, and we assume it
     is our money. It is a matter of fairness. We are using gift cards more and more- these are
     ways for us to show love. We expect these to be ours. I think this bill provides
     transparency, fairness, and it is good for consumers. This bill increases basic fairness. Gift
     cards are expected to help basic needs. Splitting payments should be a basic matter of
     fairness. It has been nearly two decades since the Legislature has done any meaningful
     changes to consumer protections for gift cards. Gift cards help low income families buy
     common essentials. Companies that don't allow for a second form of payment keep people
     from using the money that they need. We need strong protections for consumers from
     companies that are trying to retain more earnings by making it more difficult to cash out our
     gift cards. The artificial barriers that corporations use just make us put more money on gift
     cards. Washington consumer protections need to be updated to keep up with the technology
     advances that are being made. Starbucks uses deceptive practices to coerce customers to
     store more of their money on Starbucks gift cards.


Senate Bill Report                               -2-                                           SB 5987
     CON: The change to $50 is the most concerning. Raising the cash back amount creates
     more opportunity for fraud and money laundering. Retailers will have to carry more cash.
     This will hurt businesses and consumers. Many advocates are accusing businesses of being
     greedy, but the advocates never reached out to develop this bill with all stakeholders.
     Cosmetologists are not setup to be cashiers to provide this much cash back. Gift cards sold
     less than $50 could be used for cash. Raising the cash out limit would make Washington
     the highest rate in the country. California currently has the highest value at $10. This bill
     will hinder local businesses ability to help their customers. The cash out threshold could
     devastate the gift card industry in the state- the risk would be too high. Grocery stores give
     out millions in gift cards to shelters. When those are given, they can only be used in the
     store. If you raise the threshold to $50, those gift cards wouldn't be used as intended. We
     don't have issues with grocery stores combining payments, but we would have concerns
     with theft and fraud. This will force stores to keep more cash in their stores, and make them
     targets for theft. This bill permits retailers to put a cap on reloads, but it does not put a
     minimum on the card either- which should be established by the retailer. This is likely
     afoul of anti money laundering statutes- those only allow diminimus use. Some retailers
     like Costco offer gift cards to companies for 20 percent off of gift cards. They retain 10
     percent of the value and we receive 70 percent of the value. If people can cash out $50,
     we'd only receive a small share of that gift card- we wouldn't be able to afford to provide
     these gift cards through Costco anymore.

     Persons Testifying: PRO: Senator Yasmin Trudeau, Prime Sponsor; Misha Werschkul,
     Washington State Budget and Policy Center; Michele Thomas, Washington Low Income
     Housing Alliance; Emma Scalzo, Balance Our Tax Code; Suresh Chanmugam, Tech 4
     Housing; Michael Johnson; Micaela Romero, WashingtonCAN.

     CON: Crystal Leatherman, Washington Retail Association; Lars Erickson, Seattle
     Metropolitan Chamber of Commerce; Brooke Davies, Cosmetologists of Washington
     United; Katie Beeson, Washington Food Industry Association (WFIA); Emily Shay,
     Association of Washington Businesses; Janet Kenefsky, Greater Vancouver Chamber;
     Phillip Rouse, Retail Gift Card Association; Brandon Houskeeper, NW Grocery
     Association; Montana Miranda, Washington Hospitality Association; Lorri Jones, The
     Blazing Onion.

     Persons Signed In To Testify But Not Testifying: No one.




Senate Bill Report                             -3-                                         SB 5987


File and source

File

2024-01-30_a31844_d267461_bill-report-5987-sbr-bfgt-ta-24.pdf

Size

10,212 bytes

SHA-256

61525785c60e6126ebbc4d28aec6e0a839d49e3fe9ec57f93e33dfc5b964ea1a

Our copy

2024-01-30_a31844_d267461_bill-report-5987-sbr-bfgt-ta-24.pdf

Original

app.leg.wa.gov