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Commerce – week of March 31, 2014

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HF 2296Unclaimed property applicable to gift certificates

 

FLOOR ACTION:

HF 2296 addresses gift certificate “unclaimed property” provisions. As amended by the Senate, the bill codifies what the State Treasurer currently practices to mirror the Federal Card Act “abandonment” provision: funds represented by an unused gift certificate balance must be reported five years from the date of issuance of the gift certificate.

It includes new provisions for certain “closed loop” gift certificates, generally purchased by a buyer for use by a person other than the buyer. These are defined as a paper certificate or electronic gift card conspicuously designated as such, redeemable for merchandise only with no expiration date, fees or deductions from the face value for failure of the certificate’s owner to present the gift certificate in a timely manner. If the card remains unpresented, it continues in force and is not subject to presumption of abandonment. This allows Iowa-domiciled merchants who issue gift certificates with no fees, deductions or expiration dates to honor them indefinitely without any “presumed abandoned” period after which it must be reported to the State Treasurer as unclaimed property. (“Open loop” certificates often carry the Visa, American Express, Discover or MasterCard logo and can be used wherever those cards are accepted, and may include fees, such as dormancy charges. They are frequently given to customers as rebates or rewards. “Closed loop” can be used only in a single store or group of stores. )

The legislation applies to gift certificates redeemable for merchandise only sold after June 30, 2014. [3/27: 46-0 (Bertrand, Boettger, Ernst, Houser absent)]


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