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F I S C A L I M P A C T R E P O R T
SPONSOR Rawson
ORIGINAL DATE
LAST UPDATED
2/15/2007
HB
SHORT TITLE Gift Certificate Sales and Redemption
SB 1030
ANALYST Schuss
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
NFI
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates HB 127/ HJCS
SOURCES OF INFORMATION
LFC Files
SUMMARY
Synopsis of Bill
Senate Bill 1030 regulates the sale and redemption of gift certificates, establishes penalties and
amends a section of the unclaimed property act. Gift certificate, in this section, means writing
identified as a gift certificate that is not redeemable in cash and is usable in its face amount in
lieu of cash in exchange for goods or services supplied by a seller, but does not include a gift
certificate useable with multiple unaffiliated sellers or goods or services. “Gift certificate"
includes an electronic card with a banked dollar value, a merchandise credit, a certificate where
the issuer has received payment for the full face value for the future purchase or delivery of
goods or services and any other medium that evidences the giving of consideration in exchange
for the right to redeem the certificate, electronic card or other medium for goods or services of at
least an equal value.
FISCAL IMPLICATIONS
The Attorney General’s Office states that the bill requires the Attorney General to investigate
and prosecute all violations of this act, but provides no appropriation for additional staff, which
may impact the agency’s other performance based budget targets
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Senate Bill 1030– Page
2
SIGNIFICANT ISSUES
Senate Bill 1030 restricts an issuer of a gift certificate to a minimum expiration period of 60
months after the date the gift certificate was issued. The bill states that the expiration date must
be conspicuously placed on the gift certificate or it is presumed to have no expiration period. The
bill prohibits the issuer from charging fees of any kind in relation to the sale, redemption or
replacement of the gift certificate other than an initial charge not to exceed the face value of the
gift certificate. The gift certificate may not be reduced in value by any fee, including a service or
dormancy fee.
A violation of this section will constitute an unfair or deceptive trade practice and shall be
subject to the penalties set forth in the Unfair Trade Practices
SB 1030 states that “gift certificate" does not include the following:
gift certificates, store gift cards or general use prepaid cards distributed to a
consumer for promotional, award, incentive, rebate or other similar purposes without
money or something of value being given by the consumer in exchange for the certificate
or card
gift certificates, store gift cards or general use prepaid cards that are sold below face
value or at a volume discount to employers or to nonprofit and charitable organizations
for fund-raising purposes
written promises, plastic cards or other electronic devices that are used solely for
telephone services; or are associated with a banking institution for debiting purposes
gift certificates issued by banks, savings and loan associations, licensed money
transmitters or credit unions operating pursuant to the laws of the United states or New
Mexico
SB 1030 amends Section 7-8A-2 NMSA 1978 (Presumptions of Abandonment) to state that a
gift certificate is presumed abandoned five years after December 31 of the year in which the
certificate was sold, but if redeemable in merchandise only, the amount abandoned is deemed to
be sixty percent of the certificate's face value.
DUPLICATION
Duplicates HB 127/ HJCS
OTHER SUBSTANTIVE ISSUES
The Attorney General’s Office offers the following background information:
According to UnclaimedAssets.com in 2005 from 3 to 5 percent of gift cards, a total of
$2.75 billion worth or more, are never redeemed and more recently (2006) consumers spent $73
billion on gift cards of which approximately 5-10 percent–worth between $3.65 and $7.3 billion
are never redeemed. A 2005 Bankrate study showed that the denomination ranged from $5 to
$5,000. Bankrate data showed that the average person spent about $44 per gift card.
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Senate Bill 1030– Page
3
Gift Certificates/Gift Cards issuers range from hitting the buyer with purchase fees, activation
fees and shipping fees, while the user can be hit again with inactivity fees or redemption fees.
Gift Certificates/Gift Cards expiration periods range from six months to five years while
activation period fees range from 12 to 24 months.
BS/csd