S 704: 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.

  
  STATE OF NEW YORK ________________________________________________________________________ 704 2025-2026 Regular Sessions  IN SENATE (Prefiled) January 8, 2025 ___________ Introduced by Sen. KRUEGER -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection AN ACT to amend the general business law, in relation to enacting the "New York gift certificate scam prevention act" The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "New York gift certificate scam prevention act". 3 § 2. Paragraph (a) of subdivision 1 of section 396-i of the general 4 business law, as amended by chapter 668 of the laws of 2021, is amended 5 to read as follows: 6 (a) For the purposes of this section, the following terms shall have 7 the following meanings: 8 (1) "gift certificate" shall mean [a certificate, electronic card, or 9 other pre-funded record that: (i) is usable at a single merchant or an 10 affiliated group of merchants that share the same name, mark, or logo, 11 or is usable at multiple, unaffiliated merchants or service providers; 12 and (ii) is issued in a specified amount; and (iii) may or may not be 13 increased in value or reloaded; and (iv) is purchased and/or loaded on a 14 prepaid basis for the future purchase or delivery of any goods or 15 services; and (v) is honored upon presentation] an open loop gift 16 certificate or a closed loop gift certificate; 17 (2) "open loop gift certificate" shall mean a gift certificate redeem- 18 able at multiple, unaffiliated merchants or service providers; [and] 19 (3) "closed loop gift certificate" shall mean a card, code, or device 20 that is: 21 (i) issued to a consumer on a prepaid basis primarily for personal, 22 family, or household purposes in a specified amount, regardless of 23 whether such amount may be increased or reloaded in exchange for 24 payment; and EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02522-01-5 
 S. 704 2 1 (ii) redeemable on presentation by a consumer at a single merchant or 2 a group of affiliated merchants. 3 (4) "promotional gift certificate" shall mean a gift certificate 4 issued for no consideration which includes on the front of the gift 5 certificate (i) a statement indicating that the card is issued for 6 promotional purposes and (ii) the expiration date for the underlying 7 funds; and 8 (5) "third-party gift certificate reseller" shall mean a merchant who, 9 without authorization from or affiliation with the business entity issu- 10 ing an open loop gift certificate, is engaged in the business of buying 11 open loop gift certificates or reselling open loop gift certificates to 12 consumers. 13 § 3. Subdivisions 4, 5, 5-a, 5-b and 6 of section 396-i of the general 14 business law are renumbered subdivisions 5, 6, 7, 8 and 9, and a new 15 subdivision 4 is added to read as follows: 16 4. (a) For an in-person sale of a gift certificate, such gift certif- 17 icate shall be enclosed in secure packaging that: 18 (i) is sealed in a manner that is not easily opened without signs of 19 tampering; 20 (ii) except as otherwise provided in subparagraph (iii) of this para- 21 graph, conceals all numeric codes specific to the activation or the 22 redemption of such gift certificate, including but not limited to, bar 23 codes, CVV numbers, PIN numbers, and activation codes; 24 (iii) displays an activation code, bar code, or other activation date 25 only if the packaging used is more secure than it otherwise would be if 26 the data were fully concealed; and 27 (iv) includes the following warning or a substantially similar warning 28 that states the following language: "DO NOT SELL OR PURCHASE IF PACKAG- 29 ING HAS BEEN BROKEN OR INDICATES TAMPERING". 30 (b) A merchant may sell a gift certificate that is not enclosed in 31 secure packaging as required under paragraph (a) of this subdivision if 32 (i) such gift certificate is a chip-enabled, numberless card that is 33 activated by a consumer after registering such gift certificate on the 34 issuer's website; or (ii) such gift certificate is sold exclusively by 35 such merchant or a group of affiliated merchants for use only at the 36 retail establishments of such merchant or affiliated merchants and is 37 secured in a physical location within such merchant's retail establish- 38 ment that is accessible only by an employee of such merchant. 39 (c) A merchant that displays a gift certificate for sale at a retail 40 establishment shall provide training to all employees of such merchant 41 whose duties regularly include the sale of open loop gift certificates 42 and/or closed loop gift certificates to consumers on how to identify and 43 respond to gift certificate scams. 44 (d) (i) Subject to the provisions of subparagraph (ii) of this para- 45 graph, when a third-party gift certificate reseller sells an open loop 46 gift certificate as part of a transaction occurring in this state, such 47 third-party gift certificate reseller shall record and maintain for a 48 minimum of three years, a copy of the following: 49 (1) The name of the person who conducted the transaction; 50 (2) The name, age, and address of the seller of the open loop gift 51 certificate; 52 (3) The seller's and consumer's driver's license or other identifica- 53 tion card number; 54 (4) A description of the purchased open loop gift certificate includ- 55 ing the retailer for which such open loop gift certificate is intended 56 for use and such open loop gift certificate's identification number; 
 S. 704 3 1 (5) The specific amount issued on the open loop gift certificate; 2 (6) The prices paid to conduct the transaction; and 3 (7) The signature of the consumer. 4 (ii) (1) The information recorded and maintained under this paragraph 5 shall be recorded chronologically in ink writing or logged into a secure 6 database, software system, or other similar technology platform. Except 7 as provided in clause two of this subparagraph, recorded information 8 made in ink writing shall not be destroyed, altered, or erased within 9 the time frame such recorded information is required to be kept under 10 subparagraph (i) of this paragraph. 11 (2) A handwritten correction may be made to an entry of information by 12 drawing a line of ink through such entry in a manner that retains legi- 13 bility. Information recorded under this section shall be open to 14 inspection by any duly authorized law enforcement officer: (A) during 15 the ordinary business hours of the third-party gift certificate resell- 16 er; or (B) at any reasonable time. 17 (3) A third-party gift certificate reseller, including an agent or 18 employee of such third-party gift certificate reseller, shall not: (A) 19 fail to make an entry of or falsify, destroy, or remove any information 20 required to be recorded and maintained under this section; (B) refuse to 21 allow any duly authorized law enforcement officer to inspect a record of 22 information or open loop gift certificate in such third-party gift 23 certificate reseller's possession during the ordinary business hours of 24 such reseller or at any reasonable time; or (C) fail to maintain a 25 record of each open loop gift certificate and transaction for at least 26 three years as required under subparagraph (i) of this paragraph. 27 § 4. This act shall take effect on the one hundred eightieth day after 28 it shall have become a law.