• Recent Actions Against Retailers: (1) New York Gift Certificate/Gift Card Law; and (2) Ohio Rebate Practices
  • January 20, 2005
  • Law Firm: Winston & Strawn LLP - Chicago Office
  • 1. New York Gift Certificate/Gift Card Law

    We have recently become aware that the state of New York has taken action against certain New York retailers to enforce New York's recently amended gift certificate/gift card law, NY CLS Gen Bus § 396-i. Specifically, the state of New York has begun citing retailers for failure to post gift certificate/gift card terms and conditions in stores as required by the amended statute.

    Effective October 18, 2004, the New York gift certificate law, NY CLS Gen Bus § 396-i, was amended by the New York legislature. Prior to October 18, 2004, this statute required only that "[t]he terms and conditions of a gift certificate store credit shall be clearly and conspicuously stated thereon." NY CLS Gen Bus § 396-i(3). The amended statute now requires that the terms and conditions of a gift certificate or gift card shall also be disclosed to the purchaser on a sign posted in the store and on any direct mail piece advertising the offer under the headline "TERMS AND CONDITIONS ARE APPLIED TO GIFT CERTIFICATES/GIFT CARDS". NY CLS Gen Bus § 396-i(2-a)(a).

    In addition, the amended statute now expressly defines the "terms and conditions" that must be disclosed on the back of any gift certificate or gift card. These include: (a) the expiration date, (b) whether any fees are assessed against the balance of the gift certificate, and (c) whether a fee will be charged for the replacement of a gift certificate that is lost, stolen, or destroyed. Additional terms and conditions including, but not be limited to, policies related to refunds, warranties, changes in terms and conditions, assignment, and waiver also shall be conspicuously printed: (a) on the gift certificate or (b) on an envelope or packaging containing the gift certificate, provided that a toll free telephone number to access the additional terms and conditions is printed on the gift certificate; or (c) on an accompanying printed document, provided that a toll free telephone number to access the additional terms and conditions is printed on the gift certificate. NY CLS Gen Bus § 396-i(3). The new disclosure requirements do not apply to a gift certificate that has no terms and conditions or that is given for free as part of a promotional program.

    Finally, the amended law now provides that no monthly service fees may be assessed against the balance of a gift certificate prior to the thirteenth month of dormancy. NY CLS Gen Bus § 396-i(5)(a)-(b).

    The statute allows an attorney general to obtain an injunction of any practices that are in violation of the statute, as well as to seek direct restitution for any damages and a civil penalty of not more than $1,000 for a violation. NY CLS Gen Bus § 396-i(4).

    In light of these recent developments, we recommend that any retailer that offers gift cards for sale in the state of New York review its gift card policies to ensure that it is fully complying with all requirements of the amended gift certificate statute, most notably the requirement to post gift certificate/gift card terms and conditions in store.

    2. Ohio Sues OfficeMax For Rebate Practices

    The Ohio Attorney General recently filed suit against Office Max Inc. for allegedly failing to honor certain rebates offered to consumers and failing to provide rain checks when sale items were not in stock. The suit filed asks that OfficeMax stop any further business practice that violates the Ohio Consumer Sales Practices Act. The suit also asks that OfficeMax pay damages to consumers who have not received rebates or were unable to purchase goods at advertised prices.