Retailers find new law muddling

By Dan Nakaso
Advertiser Staff Writer

Customers come in all of the time to Hanai Bear in Pearlridge Center with gift certificates and gift cards that have outlived their two-year life span, but the folks at Hanai Bear honor them anyway.

Sharon Reynolds, of Hanai Bear, strives to create a space where people can have fun stuffing and dressing bears. Refusing to accept expired gift certificates would go against that philosophy, she says. Deborah Booker • The Honolulu Advertiser

"We get people who come in with all sorts of stories about finding gift certificates well beyond two years, so especially at a place like our store, we still take them," said Sharon Reynolds, the manager who is also part owner of the family business. "It makes bookkeeping sort of cumbersome, so we would like people to redeem them as soon as possible."

Earlier this month, Gov. Linda Lingle signed a bill designed to clarify Hawai'i laws governing gift certificates and gift cards, such as prohibiting so-called "dormancy fees" — or deductions — on the value of gift cards.

The new rules go into effect July 1, 2005. But Reynolds — or someone else from Hanai Bear — will join an estimated 200 other retailers at a meeting of the Retail Merchants of Hawaii to get a fuller understanding of how the changes might affect their businesses.

"We don't want to be in violation," Reynolds said. "There might be something we don't know, and we need to see if there's more to it then we thought."

The changes in Hawai'i follow new laws on the Mainland over dormancy fees connected to plastic gift cards, said Steve Levins, Hawai'i's state consumer protector who will be the featured speaker at the Retail Merchants meeting.

"There has been sort of a groundswell of concern recently ... as the technology has gotten more sophisticated and gift certificates have been converted from paper to these plastic cards," Levins said. "If you weren't using your card within a certain period ... national retailers have been taking a certain dollar amount from the value of the card for each month that the card was not used. People don't like that. Consumers feel that if they paid for the card, they should get full value for it."

But the issue gave legislators the chance to clarify the state's law regarding paper gift certificates and plastic gift cards.

The changes clarify that the dates of issue and expiration are to be clearly visible on the face of gift certificates or, with gift cards, printed on accompanying sales receipts. Certificates and cards with no expiration date will be valid forever.

The changes do not apply to gift certificates issued by retailers for awards, loyalty or promotional programs, or to not-for-profit charity organizations.

Essentially, the bill clarifies that donated gift certificates are exempt.

"You could have a termination date of 30 days, if it's clearly disclosed," Levins said. "So if you want to close it out on the books after 30 days and it's clear on the gift certificate, then it's not going to be a problem."

The Retail Merchants of Hawaii organized the meeting out of fear that small businesses, in particular, will be confused by the upcoming changes. The organization is trying to arrange a similar seminar on Maui.

"Larger companies generally know what the regulations are, with their attorneys and HR (human resources) departments," said Carol Pregill, the group's president. "The problem is with smaller businesses. The focus is to get everyone marching to the same drummer because it's a benefit for the industry to work this out."

Both paper gift certificates and plastic gift cards create costs for bookkeeping and materials, such as stationery and envelopes. The cost of the cards alone can run between 40 cents to 70 cents per card, said Tom Jones, chairman of the Hawai'i Restaurant Association, which is urging members to attend the Retail Merchants seminar.

At the two Gyotaku restaurants he co-owns, Jones is evaluating the costs associated with gift certificates and gift cards.

But he hates the idea of not giving customers gift certificates or gift cards.

"We're in the hospitality business," Jones said. "We always want to tell the customer, 'Yes.'"

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or at 525-8085.