Legislation simplifies use of store gift cards

Kirsten Searer

Thursday, April 28, 2005 | 10:46 a.m.

CARSON CITY -- Retail store gift cards would be easier to use under a bill heard Tuesday by the Senate Commerce and Labor Committee.

Assembly Bill 19 prohibits retailers from putting an expiration date on a gift card unless the date or a toll-free information number is printed plainly on the card.

It also prohibits businesses from charging service fees of more than $1 a month. The fees couldn't take effect before the card is a year old.

"Cash bought the card, and the card should be valid," said Assemblyman Joe Hardy, R-Boulder City, who is a co-sponsor of the bill.

The bills evolved before it was passed out of the Assembly. It originally would have banned expiration dates on all gift cards worth $50 or more.

It also would have banned service fees on any gift cards.

But representatives of several retail groups argued that retailers charge service fees and set expiration dates for basic accounting reasons.

"A gift card is an obligation," said Mary Lau, executive director of the Retail Association of Nevada. "It's on your balance sheet as an accounts payable. You have to declare that as a liability, it's not an asset to you."

Assemblyman David Parks, D-Las Vegas, said retailers made an argument that they have accounting costs associated with keeping that money on the books.

Other companies, including credit card companies that issue gift cards, spend money protecting the cards from identity theft, according to testimony.

Lau said, however, that more retailers are phasing out expiration dates and service fees because of market pressure.

"This is a very big issue, and it's a rapidly evolving part of our market," she said.

The retail association, the Las Vegas Chamber of Commerce and the Nevada Restaurant Association all endorsed the amended bill.

The hearing led to a venting session when legislators talked about different fees and restrictions charged by retailers.

"Why do we have to have an expiration date on the card?" asked Sen. John Lee, D-North Las Vegas. "It's cash. They're able to put it in the company, able to build their business. I have a problem with the expiration date."

Sen. Mike Schneider, D-Las Vegas, joked: "I'm concerned about my Trader Joe's card that I have had lying around."

Others complained about restocking fees or policies that bar customers for getting refunds on good, forcing them instead to use store credit. Assembly Bill 19 would not address those issues.

"We've opened a huge can, and there are some worms in it," Hardy said.

The Commerce and Labor Committee decided to form a subcommittee to further examine the issue.