[Congressional Record Volume 158, Number 148 (Monday, November 26, 2012)]
[Senate]
[Pages S6895-S6896]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BLUMENTHAL:
       S. 3636. A bill to provide increased consumer protections 
     for gift cards; to the Committee on Banking, Housing, and 
     Urban Affairs.
  Mr. BLUMENTHAL. Mr. President, as consumers shop for the holidays, 
more and more consumers are buying, giving, and receiving gift cards.
  By one estimate, Americans spent over $100 billion on gift cards in 
the 2011 holiday shopping season, and that nearly $2 billion of that 
value went unused.
  Today I am introducing legislation to help substantially remedy that 
problem and to ensure that consumers receive the full value that is 
stored on their gift cards.
  Whether it is a bankrupt company that refuses to honor a gift 
certificate, a gift card with hidden fees that slowly withers down to 
nothing, or a ``promotional'' gift card that expires in the virtual 
blink of an eye, consumers in Connecticut and across the nation are in 
danger of seeing the value of their gift cards disappear.
  The Gift Card Consumer Protection Act will stop these abusive 
practices.
  This bill uses as a model or blueprint the Connecticut law that I 
advocated and helped write while serving as Attorney General, but it 
adds to protections provided by that state law and others.
  This new measure enhances and expands gift card safeguards, 
particularly when gift card sellers become legally insolvent and seek 
bankruptcy status.
  It will add strong new protections for consumers when a company goes 
bankrupt. Under this bill, a company that files for bankruptcy must 
immediately

[[Page S6896]]

stop selling its gift cards and is required to honor existing gift 
cards until it goes out of business.
  First, this bill will ban expiration dates and inactivity fees.
  Connecticut gift card consumers have the benefit of clear and robust 
protections: their gift cards do not expire, and they do not carry any 
non-use or dormancy fees. These protections apply whether the gift card 
is purchased by a consumer or obtained as a rebate or bonus for the 
purchase of another product because in both situations, the consumer is 
relying on an expectation that the funds on the card will not expire 
and will not be depleted by fees.
  As a U.S. Senator, I have often advocated for bringing Connecticut's 
strong consumer protection laws to the rest of the Nation, and that is 
what this bill does.
  Under current Federal law, gift cards may expire after 5 years, and 
they be charged inactivity fees after 1 year. And loyalty, award, and 
promotional cards are not covered at all.
  This bill would eliminate expiration dates and inactivity fees for 
gift cards, and it would include those protections for loyalty, award, 
and promotional gift cards.
  This bill will give peace of mind and security to consumers when they 
purchase gift cards. They can shop with confidence, knowing that the 
money on their gift cards will not expire, will not diminish over time, 
and will not be refused if a company goes out of business.
  I am grateful that many in the industry already follow these 
practices. Best Buy, for instance, doesn't charge fees on their gift 
cards and they do not expire. When you get a bonus card for a purchase, 
that card doesn't expire or carry fees, either. The same is true for 
Barnes and Noble, and others.
  These practices should prevail uniformly for every company.
  Unfortunately that is not the case. Some large companies assess 
inactivity fees after a year, others issue promotional gift cards that 
expire very quickly, sometimes as soon as forty days from the card's 
issuance.
  The result is confusion and a lack of consumer confidence. ``Does 
this company's gift card have hidden fees? Does the money on this $20 
bonus card last until I use it, or will it expire next month? This ad 
says I get a promotional gift card when I buy a new TV: does that mean 
it won't expire for five years, or will it expire in 30 days?''
  The Gift Card Consumer Protection Act will address and dispel such 
doubt and confusion and make it clear that consumers who receive or buy 
gift cards whether by purchasing them directly or as part of a rebate 
or promotion need not worry about the cards expiring or being depleted 
by inactivity fees. It provides protections for gift card holders when 
a company files for bankruptcy protection.
  The Gift Card Consumer Protection Act assures that consumers get 
their money's worth, no matter when they use the gift card.
  I invite my colleagues to cosponsor the Gift Card Consumer Protection 
Act and ensure that gift card consumers do not see the value of their 
gift cards disappear due to unfair fees or expiration dates or a 
company bankruptcy.
                                 ______