Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2140 entitled:

begs leave to report as follows:

The purpose of this measure is to prohibit the issuance of gift certificates with expiration dates and subject to inactivity fees.

The Department of Commerce and Consumer Affairs and Department of Budget and Finance presented comments on the measure. Retail Merchants of Hawaii, Legislative Information Services of Hawaii, and Tiki's Grill and Bar, LLC, opposed the measure.

Current law requires that gift certificates be valid for a minimum two-year period and provides that gift certificates unredeemed upon their expiration dates be distributed to the State as abandoned property. This measure prohibits the expiration of gift certificates, and, therefore, provides that unredeemed gift certificates do not constitute abandoned property. The prohibition on expiration dates does not apply to donated gift certificates, which are permitted to expire after two years. This measure also prohibits dormancy fees and other charges assessed against a gift certificate for inactivity.

Your Committee finds that this measure raises several concerns, including those relating to the imposition of additional regulations and costs upon businesses, and retailers being allowed to retain the proceeds of unredeemed certificates that will no longer escheat to the State.

Your Committee further finds that the Department of Commerce and Consumer Affairs and the Retail Merchants of Hawaii have been engaged in ongoing discussions to resolve the concerns of consumers and retailers about gift certificates, and that the concerns raised herein should be included in those discussions.

Therefore, your Committee has amended this measure by inserting therein a delayed effective date of July 1, 2030, to facilitate further review and discussion. Additionally, your Committee amended this measure to:

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2140, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2140, S.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.