[Congressional Record Volume 150, Number 128 (Saturday, October 9, 2004)]
[Senate]
[Pages S10986-S10987]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SCHUMER:
  S. 2969. A bill entitled the ``Fair Gift Card Act'', to the Committee 
on Banking, Housing, and Urban Affairs.
  Mr. SCHUMER. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Gift Card Act''.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Gift certificate, store gift card, other prepaid 
     cards.--The terms ``gift certificate'', ``store gift card'', 
     and ``general-use prepaid card'' have the following meanings:

[[Page S10987]]

       (A) Gift certificate.--The term ``gift certificate'' means 
     a written promise that is--
       (i) usable at a single merchant or an affiliated group of 
     merchants that share the same name, mark, or logo;
       (ii) issued in a specified amount and cannot be increased;
       (iii) purchased on a prepaid basis in exchange for payment; 
     and
       (iv) honored upon presentation by such single merchant or 
     affiliated group of merchants for goods or services.
       (B) Store gift card.--The term ``store gift card'' means a 
     plastic card or other electronic payment device that is--
       (i) usable at a single merchant or an affiliated group of 
     merchants that share the same name, mark, or logo;
       (ii) issued in a specified amount and may or may not be 
     increased in value or reloaded;
       (iii) purchased on a prepaid basis in exchange for payment; 
     and
       (iv) honored upon presentation by such single merchant or 
     affiliated group of merchants for goods or services.
       (C) General-use prepaid card.--
       (i) In general.--The term ``general-use prepaid card'' 
     means a card or other electronic payment device issued by a 
     bank or financial institution, or by a licensed money 
     transmitter that is--

       (I) usable at multiple, unaffiliated merchants or service 
     providers, or at automated teller machines;
       (II) issued in a requested amount whether or not that 
     amount may be, at the option of the issuer, increased in 
     value or reloaded if requested by the holder;
       (III) purchased or loaded on a prepaid basis; and
       (IV) honored, upon presentation, by merchants for goods or 
     services, or at automated teller machines.

       (ii) Exception.--The term ``general-use prepaid card'' does 
     not include a debit card that is linked to a demand deposit 
     or share draft account.
       (D) Exclusion.--The terms ``gift certificate'', ``store 
     gift card'', and ``general-use prepaid card'' do not include 
     a written promise, plastic card, or other electronic device 
     that is--
       (i) used solely for telephone services; or
       (ii) associated with a demand deposit, checking, savings or 
     similar account in the name of the individual at a bank or 
     financial institution, and that provides payment solely by 
     debiting such account.
       (2) Debit card.--The term ``debit card'' has the meaning 
     given that term under section 603(r)(3) of the Fair Credit 
     Reporting Act (15 U.S.C. 1681a(r)(3)).
       (3) Financial institution.--The term ``financial 
     institution'' has the meaning given that term under section 
     603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)).
       (4) Dormancy fee; inactivity charge or fee.--The terms 
     ``dormancy fee'' and ``inactivity charge or fee'' mean a fee, 
     charge, or penalty for non use or inactivity of a gift 
     certificate, store gift card, or prepaid general-use card.
       (5) Service fee.--The term ``service fee'' means a periodic 
     fee, charge, or penalty for holding or use of a gift 
     certificate, store card, or prepaid general use card.
       (6) Licensed money transmitter.--The term ``licensed money 
     transmitter'' means a person who sells or issues payment 
     instruments or engages in the business of receiving money for 
     transmission or transmitting money within the United States 
     or to locations abroad by any and all means, including but 
     not limited to payment instrument, wire, facsimile or 
     electronic transfer.

     SEC. 3. REGULATION OF UNFAIR AND DECEPTIVE ACTS AND PRACTICES 
                   IN CONNECTION WITH GIFT CARDS.

       (a) Imposition of Fees or Charges.--
       (1) In general.--Except as provided for in paragraphs (2), 
     (3), and (4) it is unlawful for any person to impose with 
     respect to a gift certificate, store gift card, or general-
     use prepaid card a dormancy fee, inactivity charge or fee or 
     a service fee.
       (2) Exception.--A dormancy fee, inactivity charge or fee, 
     or service fee described in paragraph (1) may be charged with 
     respect to a gift certificate, store gift card, or general-
     use prepaid card if--
       (A) at the time the charge or fee is assessed the 
     certificate or card has a remaining value of $5 or less;
       (B) the charge or fee does not exceed $1;
       (C) there has been no activity with respect to the 
     certificate or the card for at least 24 consecutive months;
       (D) the holder of the certificate or the card may reload or 
     add value to the certificate or the card; and
       (E) the requirements of paragraph (3) are met.
       (3) Requirements.--The requirements of this paragraph are 
     that--
       (A) the certificate or card clearly and conspicuously 
     states in 10-point font--
       (i) that a charge or fee described in paragraph (1) may be 
     charged; and
       (ii) the amount of the charge or fee, how often the charge 
     or fee may be assessed, and that the charge or fee may be 
     assessed for inactivity; and
       (B) the issuer of the certificate or card informs the 
     purchaser of the charge or the fee before the certificate or 
     card is purchased, regardless of whether the certificate or 
     card is purchased in person, over the Internet, or by 
     telephone.
       (4) Exclusion.--The prohibitions and requirements contained 
     in this subsection shall not apply to gift certificates 
     that--
       (A) are distributed pursuant to an award, loyalty, or 
     promotional program and with respect to which there is no 
     money or other value exchanged; or
       (B) expire not later than 30 days after the date they are 
     sold and are sold below the face value of the certificate to 
     an employer, or to a nonprofit or charitable organization for 
     fundraising purposes.
       (b) Limitations on Expiration Date.--
       (1) In general.--Except as provided in paragraph (2), it is 
     unlawful for any person to sell or issue a gift certificate, 
     store gift card, or general-use prepaid card that is subject 
     to an expiration date.
       (2) Exceptions.--A gift certificate, store gift card, or 
     general-use prepaid card may contain an expiration date if 
     the expiration date is not less than 5 years from the date 
     the card is purchased. Expiration terms must be prominently 
     disclosed in at least 10-point font and in all capital 
     letters.

     SEC. 4. RELATION TO STATE LAWS

       The Act and any regulations or standards established 
     pursuant to this Act shall not supersede any State law or 
     regulation with respect to charges, fees, and expiration 
     dates of gift certificates, store gift card, or general-use 
     prepaid cards.

     SEC. 5. ENFORCEMENT.

       (a) Unfair or Deceptive Act or Practice.--A violation of 
     this Act shall be treated as a violation of a rule defining 
     an unfair or deceptive act or practice prescribed under 
     section 18(a)(1)(B) of the Federal Trade Commission Act (15 
     U.S.C. 57a(a)(1)(B)).
       (b) Actions by the Commission.--The Federal Trade 
     Commission shall enforce this Act in the same manner, by the 
     same means, and with the same jurisdiction, powers, and 
     duties as though all applicable terms and provisions of the 
     Federal Trade Commission Act (15 U.S.C. 41 et seq.) were 
     incorporated into and made a part of this Act.
       (c) Individual Cause of Action.--Nothing in this Act shall 
     be construed to limit an individual's rights to enforce a 
     State law relating to unfair or deceptive acts or practices.
                                 ______