Senate rejects gift-card extension

By Lynda Arakawa
Advertiser Capitol Bureau

A Senate panel yesterday tossed out a House proposal to extend the life of gift certificates and gift cards from two to seven years, but still wants to prohibit inactivity fees on electronic gift cards.

The Senate Commerce, Consumer Protection and Housing Committee amended House Bill 2143 to continue the current mandate that retailers and restaurants honor gift certificates for at least two years. The Senate draft also prohibits dormancy, or inactivity, fees that are sometimes charged on gift cards if they are not used for a period of time. The bill would prohibit such fees for two years.

The Senate version of the bill also would exempt promotional gift certificates from the expiration law and require that the date of issuance be printed clearly on the face of gift certificates or gift card receipts.

The bill now goes to the Senate floor for a vote and likely will be discussed further in conference committee.

The House's version of the bill would require gift certificates and gift cards to be valid for at least seven years and also prohibit dormancy fees for seven years. It also would give consumers who use at least 90 percent of the gift certificate's value the right to receive the balance in cash.

The House's measure drew opposition from retailers and restaurant owners. They said such a requirement would burden small businesses, which would have to carry unredeemed certificates on their books as a liability for years. They also said most businesses honor expired gift certificates in keeping with good customer-service practices.

Senate Commerce, Consumer Protection and Housing Committee Chairman Ron Menor, D-17th (Mililani, Waipi'o), said he and other committee members had concerns about the seven-year requirement.

"It seemed unnecessarily long and would create administrative difficulties for businesses in Hawai'i," he said. "I think that the two-year period is reasonable, and the committee decided to pass the bill out to ensure that the two-year period would apply uniformly to all businesses issuing gift certificates in the future."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com or at 525-8070.