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Bill Would Require Companies to Honor Gift Cards in Bankruptcy, Prohibit Fees

Friday, December 21, 2012

  • Legislation Proposed: The Gift Card Consumer Protection Act of 2012 (S. 3636) would require companies to honor gift cards in bankruptcy.

  • Other Purposes: Bill would prohibit expiration dates on gift cards as well as certain fees.


By Stephanie M. Acree

Sen. Richard Blumenthal (D-Conn.) introduced a bill Nov. 26 that would require companies in bankruptcy to honor outstanding gift cards.

The Gift Card Consumer Protection Act of 2012 (S. 3636) would also prohibit expiration dates on gift cards as well as certain fees associated with gift cards.

The bill was referred to the Committee on Banking, Housing, and Urban Affairs.

“This bill bars absolutely draconian deadlines and abusive fees and charges that unfairly confiscate consumer gift card cash. Gift card companies fatten their profits and shrink consumer wallets with exploitative expiration dates and petty, underhanded junk fees,” Blumenthal said in a Nov. 23 press release. “Gift cards should not be the gift that keeps on taking. This measure assures that consumers get their money's worth, no matter when they use the gift card.”


Same as Cash
In addition to requiring companies in bankruptcy to “honor a gift certificate or store gift card issued by the debtor at full value and treat the gift certificate or store gift card the same as cash,” the bill would also make it unlawful for a company to continue to sell gift cards or gift certificates after it has filed for bankruptcy. According to the release, Circuit City and Linens 'n Things were two debtor companies that allowed customers to buy gift cards from their stores after they had filed for bankruptcy protection. The bill will also afford “loyalty, promotion, and award cards,” which the release describes as “cards consumers receive by redeeming credit card points or buying a certain product,” the same protections as gift cards.

According to the release, the bill “would significantly strengthen present law, which permits expiration of cards after five years, and non-use fees after one year.” The bill would prohibit “a dormancy fee, an inactivity charge or fee, or a service fee with respect to a gift certificate, store gift card, or general-use prepaid card.”

By Stephanie M. Acree


Full text of the Gift Card Consumer Protection Act of 2012 is available at: /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/Gift-Cards(1).pdf

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