No more expiration dates on gift certificates
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Lobbyist Money Help  

No more expiration dates on gift certificates

Date: February 1, 2007
By: Cliff Ainsworth
State Capitol Bureau

JEFFERSON CITY - If you still haven't used that gift card you received last Christmas, you may not have to worry about redeeming it any time soon if a pair of bills filed in the Missouri legislature become law.

Rep. Mark Bruns, R-Jefferson City, introduced a bill that would prohibit gift certificates from expiring and ban service fees from being levied on certificates that aren't used within a prescribed timeframe.  The measure would cover certificates as well as gift cards, many of which expire in 12 months or decline in value if they aren't promptly redeemed.

"I thought, a store or company gets payment and they're not really providing anything in return," Bruns said.  "In my mind, it's equal to theft.  They should honor the face value of the the gift certificate.  Just to devalue it without warning, I think that's unfair to the consumer."

But the Missouri Retailers Association is opposed to the legislation, arguing that the market - rather than lawmakers - should determine gift certificate policies.

"If a customer doesn't want to buy a gift card with an expiration date, that's their choice," said David Overfelt, a lobbyist for the association. "People know what they're buying."

Overfelt said that the vast majority of gift card recipients use the cards within 30-60 days of purchasing them and that if it hasn't been redeemed within six months to a year, it probably won't be.  He said that one reason gift cards have expirations is to prevent theft, since cards with magnetic strips can be copied.

Bruns signaled he is willing to be flexible with his bill, saying he wouldn't be opposed to measures protecting the new owner of a business from having to honor certificates issued by the previous owner, and extending expiration dates to five years. 

Bruns was prompted to propose the bill after receiving several calls from constituents who were upset that gift cards they had accumulated declined in value.  He added that he's confident about the bill's chances in the legislature and that all of the legislators he's talked to about it are supportive.

Democratic Minority Leader Maida Coleman, St. Louis, has also proposed a ban on gift certificate expirations.

Similar legislation was proposed in 2005, but was not reconciled with retailers' concerns in time to pass.  That bill would have also prohibited expiration dates on discounted vacation packages.

Six states already prohibit expirations on gift cards, while many other states require that they remain valid for a minimum period of time, according to the National Conference of State Legislatures.

Retailers do not record gift card sales as revenue until they are used to purchase merchandise.  If the cards have not been redeemed within two years, businesses still must report them as income for tax purposes.

According to the National Retail Federation, gift card sales over the 2006 holiday-shopping season surged to $24.81 billion from $18.48 billion the previous year.