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Metro Creative Connection

State legislation in place to protect credit & gift card holders


Mon, Dec 13th 2021 11:45 am

Legislation protects credit card holders from cancellation of accumulated rewards, prohibits gift card fees and limits expiration dates

Gov. Kathy Hochul recently signed a package of legislation to protect consumers from exploitative credit and gift card practices in New York. Legislation S.133-B/A.5698-B protects credit card holders by creating a grace period for the use of reward points after the closing of an account. Legislation S.3467-B/A.4629-C prohibits fees and expiration dates on gift cards and gift certificates.

"As we enter the holiday season of giving, and New Yorkers buy gifts for their friends and family, it's more important than ever that we protect them from unfair practices that have a real impact on consumers' bottom line," Hochul said. "This legislation will guarantee a season of good cheer in New York state by making sure that no New Yorker unfairly loses their accumulated credit card rewards or is shortchanged when buying a gift card for a loved one."

Hochul’s team said, “Legislation S.133-B/A.5698-B protects credit card holders by creating a grace period for the use of reward points after the closing of an account so they do not fall victim to rewards programs that are often governed by agreements that are not transparent to consumers. One particular provision in many credit card agreements allows the credit card issuer to cancel all accumulated rewards points or other rewards benefits upon the closure of the credit card account, without affording the credit card holder any opportunity to use accumulated points. This becomes a consumer protection issue when the issuer unilaterally closes an account for reasons such as a holder failing to make a payment, or for unspecified reasons that fall under catch-all clauses such as if the issuer believes the holder may be unwilling or unable to pay their debts on time.

“Legislation S.3467-B/A.4629-C prohibits fees and expiration dates on gift cards and gift certificates. Many gift cards are sold with a variety of fees attached that can significantly reduce their value. These include fees paid at the time of purchase and dormancy fees for failing to use a gift card for a certain period of time. The Federal Credit CARD Act of 2009 placed some restrictions on gift card fees by prohibiting dormancy fees unless a gift card is dormant for at least 12 months and by limiting the frequency of periodic fees to no more than once a month. The CARD Act also prohibits expiration dates prior to five years after issuance. However, permitted fees on gift cards can still be substantial. This bill protects consumers by prohibiting all fees on gift cards and prohibiting gift cards that decline in value over time. In addition, to further eliminate loss of value to consumers, this bill prohibits expiration dates on gift cards and gift certificates that occur earlier than nine years from the date of issuance and allows for redemption when the remaining balance is less than $5.

New York State Sen. Shelley B. Mayer said, "The sudden and unexpected cancellation of credit card rewards points is devastating, especially for those who save them over long periods of time. Similarly, gift card policies that prey on consumers by making funds difficult to access are wrong. Consumers deserve transparency from the companies they trust with their hard-earned money. I am pleased two of my bills, S133-B and S3467-B, will soon protect New Yorkers from unfair behavior of credit card companies and gift card issuers. Thank you to Assembly sponsors Assemblywoman Nily Rozic and Assemblyman Nader Sayegh, and thank you to Gov. Kathy Hochul for signing these important consumer protections into law."

Rozic said, "New York consumers deserve access to the credit card rewards points they earned, and transparency about how they are governed. Thank you to Gov. Hochul for signing this common-sense legislation to protect consumers."

Sayegh said, "It's just wrong to receive a gift card or gift certificate only to learn later that the value of the gift has automatically declined in value over time, or has expired. That is why I introduced this legislation to prohibit all fees on gift cards and certificates purchased in New York. I thank Sen. Shelley Mayer for winning passage of this bill in the Senate, and thank Gov. Kathy Hochul for signing the bill right in the heart of the holiday shopping season."

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