BILL REQ. #:  S-4329.1 

Read first time 01/29/2004.   Referred to Committee on Financial Services, Insurance & Housing.

     AN ACT Relating to gift certificates; amending RCW 63.29.010, 63.29.020, 63.29.140, and 63.29.170; adding a new chapter to Title 19 RCW; creating a new section; and providing effective dates.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   It is the intent of the legislature to relieve businesses from the obligation of reporting gift certificates as unclaimed property. In order to protect consumers, the legislature intends to prohibit acts and practices of retailers that deprive consumers of the full value of gift certificates, such as expiration dates, service fees, and dormancy and inactivity charges, on gift certificates. The legislature does not intend that this act be construed to apply to cards or other payment instruments issued for payment of wages or other intangible property. To that end, the legislature intends that this act should be liberally construed to benefit consumers and that any ambiguities should be resolved by applying the uniform unclaimed property act to the intangible property in question.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Artistic or cultural organization" has the same meaning as in RCW 82.04.4328.
     (2) "Charitable organization" means an organization exempt from tax under section 501(c)(3) of the internal revenue code of 1986 (26 U.S.C. Sec. 501(c)(3)).
     (3) "Fund-raising activity" has the same meaning as in RCW 82.04.3651.
     (4) "Gift card" means a record as described in subsection (5) of this section in the form of a card, or a stored value card or other physical medium, containing stored value primarily intended to be exchanged for consumer goods and services.
     (5) "Gift certificate" means a record evidencing a promise by the seller or issuer of the record that consumer goods or services will be provided to the holder of the record for the value or credit shown in the record and includes gift cards.
     (6) "Holder" means a person with a right to receive consumer goods and services under the terms of a gift certificate, without regard to any fee, expiration date, or dormancy or inactivity charge.
     (7) "Issue" includes reloading or adding value to an existing gift certificate.
     (8) "Stored value" has the same meaning as in RCW 19.230.010.

NEW SECTION.  Sec. 3   (1) Except as provided in section 4 of this act, it is unlawful for any person or entity to sell, issue, or enforce against a holder, a gift certificate that contains:
     (a) An expiration date;
     (b) Any fee, including a service fee; or
     (c) A dormancy or inactivity charge.
     (2) If a purchase is made with a gift certificate for an amount that is less than the value of the gift certificate, the issuer must make the remaining value available to the holder in cash or as a gift certificate. If after the purchase the remaining value of the gift certificate is less than five dollars, the gift certificate must be redeemable in cash for its remaining value. A gift certificate is valid until redeemed or replaced.

NEW SECTION.  Sec. 4   (1) It is lawful to issue, and enforce against the holder, a gift certificate containing an expiration date if:
     (a) The gift certificate is issued pursuant to a promotional program, without any money or other thing of value being given in exchange for the gift certificate;
     (b) The expiration date appears in capital letters in at least ten-point font on the front of the gift certificate;
     (c) The expiration date is at least three years from the date the gift certificate is issued; and
     (d) A statement is printed on the gift certificate that the gift certificate is for promotional purposes only and not for sale or purchase.
     (2) It is lawful to issue, and enforce against the holder, a gift certificate containing an expiration date, and for a charitable organization to sell a gift certificate containing an expiration date as part of its fund-raising activities if:
     (a) The gift certificate is donated by the issuer to a charitable organization and is used for fund-raising activities, without any money or other thing of value being given in exchange for the gift certificate to the issuer;
     (b) The expiration date appears in capital letters in at least ten-point font on the front of the gift certificate;
     (c) The expiration date is at least three years from the date the gift certificate is issued; and
     (d) A statement is printed on the gift certificate that the gift certificate was provided as a donation.
     (3) It is lawful to sell, issue, and enforce against the holder, a gift certificate containing an expiration date that is at least three years from the date the gift certificate is issued if the gift certificate is redeemable solely for goods or services provided in the state of Washington by artistic or cultural organizations, and the unused value of the gift certificate at the time of expiration accrues solely to the benefit of artistic or cultural organizations.
     (4) It is lawful to sell, issue, and enforce against the holder, a gift certificate containing a dormancy or inactivity charge if:
     (a) A statement is printed on the gift card in at least ten-point font stating the amount of the charge, how often the charge will occur, and that the charge is triggered by inactivity of the gift card. The statement may appear on the front or back of the gift card, but shall appear in a location where it is visible to any purchaser before the purchase of the gift card;
     (b) The remaining value of the gift card is five dollars or less each time the charge is assessed;
     (c) The charge does not exceed one dollar per month;
     (d) The charge can only be assessed when there has been no activity on the gift card for twenty-four consecutive months, including but not limited to, purchases, the adding of value, or balance inquiries; and
     (e) The holder may reload or add value to the gift card.

NEW SECTION.  Sec. 5   An issuer is not required to honor a gift certificate presumed abandoned under RCW 63.29.110 and reported and delivered to the department of revenue in the dissolution of a business association.

NEW SECTION.  Sec. 6   (1) A gift certificate constitutes value held in trust by the issuer of the gift certificate on behalf of the beneficiary of the gift certificate. The value represented by the gift certificate belongs to the beneficiary, or to the legal representative of the beneficiary to the extent provided by law, and not to the issuer.
     (2) An issuer of a gift certificate who is in bankruptcy shall continue to honor a gift certificate issued before the date of the bankruptcy filing on the grounds that the value of the gift certificate constitutes trust property of the beneficiary.
     (3) The terms of a gift certificate may not make its redemption or other use invalid in the event of a bankruptcy.
     (4) This section does not require, unless otherwise required by law, the issuer of a gift certificate to:
     (a) Redeem a gift certificate for cash;
     (b) Replace a lost or stolen gift certificate; or
     (c) Maintain a separate account for the funds used to purchase the gift certificate.
     (5) This section does not create an interest in favor of the beneficiary of the gift certificate in any specific property of the issuer.
     (6) This section does not create a fiduciary or quasi-fiduciary relationship between the beneficiary of the gift certificates and the issuer unless otherwise provided by law.
     (7) The issuer of a gift certificate has no obligation to pay interest on the value of a gift certificate held in trust under this section, unless otherwise provided by law.

NEW SECTION.  Sec. 7   This chapter does not apply to gift certificates issued by federally chartered banks or their operating subsidiaries that are usable with multiple unaffiliated sellers of goods or services.

NEW SECTION.  Sec. 8   An agreement made in violation of the provisions of this chapter is contrary to public policy and is void and unenforceable against the holder.

Sec. 9   RCW 63.29.010 and 1983 c 179 s 1 are each amended to read as follows:
     As used in this chapter, unless the context otherwise requires:
     (1) "Department" means the department of revenue established under RCW 82.01.050.
     (2) "Apparent owner" means the person whose name appears on the records of the holder as the person entitled to property held, issued, or owing by the holder.
     (3) "Attorney general" means the chief legal officer of this state referred to in chapter 43.10 RCW.
     (4) "Banking organization" means a bank, trust company, savings bank, land bank, safe deposit company, private banker, or any organization defined by other law as a bank or banking organization.
     (5) "Business association" means a nonpublic corporation, joint stock company, investment company, business trust, partnership, or association for business purposes of two or more individuals, whether or not for profit, including a banking organization, financial organization, insurance company, or utility.
     (6) "Domicile" means the state of incorporation of a corporation and the state of the principal place of business of an unincorporated person.
     (7) "Financial organization" means a savings and loan association, cooperative bank, building and loan association, or credit union.
     (8) "Gift certificate" has the same meaning as in section 2 of this act.
     (9) "Holder" means a person, wherever organized or domiciled, who is:
     (a) In possession of property belonging to another,
     (b) A trustee, or
     (c) Indebted to another on an obligation.
     (((9))) (10) "Insurance company" means an association, corporation, fraternal or mutual benefit organization, whether or not for profit, which is engaged in providing insurance coverage, including accident, burial, casualty, credit life, contract performance, dental, fidelity, fire, health, hospitalization, illness, life (including endowments and annuities), malpractice, marine, mortgage, surety, and wage protection insurance.
     (((10))) (11) "Intangible property" does not include contract claims which are unliquidated but does include:
     (a) Moneys, checks, drafts, deposits, interest, dividends, and income;
     (b) Credit balances, customer overpayments, gift certificates, security deposits, refunds, credit memos, unpaid wages, unused airline tickets, and unidentified remittances, but does not include discounts which represent credit balances for which no consideration was given;
     (c) Stocks, and other intangible ownership interests in business associations;
     (d) Moneys deposited to redeem stocks, bonds, coupons, and other securities, or to make distributions;
     (e) Liquidated amounts due and payable under the terms of insurance policies; and
     (f) Amounts distributable from a trust or custodial fund established under a plan to provide health, welfare, pension, vacation, severance, retirement, death, stock purchase, profit sharing, employee savings, supplemental unemployment insurance, or similar benefits.
     (((11))) (12) "Last known address" means a description of the location of the apparent owner sufficient for the purpose of the delivery of mail.
     (((12))) (13) "Owner" means a depositor in the case of a deposit, a beneficiary in case of a trust other than a deposit in trust, a creditor, claimant, or payee in the case of other intangible property, or a person having a legal or equitable interest in property subject to this chapter or his legal representative.
     (((13))) (14) "Person" means an individual, business association, state or other government, governmental subdivision or agency, public corporation, public authority, estate, trust, two or more persons having a joint or common interest, or any other legal or commercial entity.
     (((14))) (15) "State" means any state, district, commonwealth, territory, insular possession, or any other area subject to the legislative authority of the United States.
     (((15))) (16) "Third party bank check" means any instrument drawn against a customer's account with a banking organization or financial organization on which the banking organization or financial organization is only secondarily liable.
     (((16))) (17) "Utility" means a person who owns or operates for public use any plant, equipment, property, franchise, or license for the transmission of communications or the production, storage, transmission, sale, delivery, or furnishing of electricity, water, steam, or gas.

Sec. 10   RCW 63.29.020 and 2003 1st sp.s. c 13 s 1 are each amended to read as follows:
     (1) Except as otherwise provided by this chapter, all intangible property, including any income or increment derived therefrom, less any lawful charges, that is held, issued, or owing in the ordinary course of the holder's business and has remained unclaimed by the owner for more than three years after it became payable or distributable is presumed abandoned.
     (2) Property, with the exception of unredeemed Washington state lottery tickets and unpresented winning parimutuel tickets, is payable and distributable for the purpose of this chapter notwithstanding the owner's failure to make demand or to present any instrument or document required to receive payment.
     (3) This chapter does not apply to claims drafts issued by insurance companies representing offers to settle claims unliquidated in amount or settled by subsequent drafts or other means.
     (4) This chapter does not apply to property covered by chapter 63.26 RCW.
     (5) This chapter does not apply to used clothing, umbrellas, bags, luggage, or other used personal effects if such property is disposed of by the holder as follows:
     (a) In the case of personal effects of negligible value, the property is destroyed; or
     (b) The property is donated to a bona fide charity.
     (6) This chapter does not apply to a gift certificate subject to the prohibition against expiration dates under section 3 of this act or to a gift certificate subject to section 4 of this act. However, this chapter applies to gift certificates presumed abandoned under RCW 63.29.110.

Sec. 11   RCW 63.29.140 and 2003 1st sp.s. c 13 s 7 are each amended to read as follows:
     (1) A gift certificate or a credit memo issued in the ordinary course of an issuer's business which remains unclaimed by the owner for more than three years after becoming payable or distributable is presumed abandoned.
     (2) In the case of a gift certificate, the amount presumed abandoned is the price paid by the purchaser for the gift certificate. In the case of a credit memo, the amount presumed abandoned is the amount credited to the recipient of the memo.
     (3) A gift certificate that is presumed abandoned under this section may, but need not be, included in the report as provided under RCW 63.29.170(4). If a gift certificate that is presumed abandoned under this section is not timely reported as provided under RCW 63.29.170(4), sections 1 through 8 of this act apply to the gift certificate.

Sec. 12   RCW 63.29.170 and 2003 c 237 s 1 are each amended to read as follows:
     (1) A person holding property presumed abandoned and subject to custody as unclaimed property under this chapter shall report to the department concerning the property as provided in this section.
     (2) The report must be verified and must include:
     (a) Except with respect to travelers checks and money orders, the name, if known, and last known address, if any, of each person appearing from the records of the holder to be the owner of property with a value of more than fifty dollars presumed abandoned under this chapter;
     (b) In the case of unclaimed funds of more than fifty dollars held or owing under any life or endowment insurance policy or annuity contract, the full name and last known address of the insured or annuitant and of the beneficiary according to the records of the insurance company holding or owing the funds;
     (c) In the case of the contents of a safe deposit box or other safekeeping repository or in the case of other tangible property, a description of the property and the place where it is held and where it may be inspected by the department, and any amounts owing to the holder;
     (d) The nature and identifying number, if any, or description of the property and the amount appearing from the records to be due, but items with a value of fifty dollars or less each may be reported in the aggregate;
     (e) The date the property became payable, demandable, or returnable, and the date of the last transaction with the apparent owner with respect to the property; and
     (f) Other information the department prescribes by rule as necessary for the administration of this chapter.
     (3) If the person holding property presumed abandoned and subject to custody as unclaimed property is a successor to other persons who previously held the property for the apparent owner or the holder has changed his or her name while holding the property, the holder shall file with the report all known names and addresses of each previous holder of the property.
     (4) The report must be filed before November 1st of each year and shall include, except as provided in RCW 63.29.140(3), all property presumed abandoned and subject to custody as unclaimed property under this chapter that is in the holder's possession as of the preceding June 30th. On written request by any person required to file a report, the department may postpone the reporting date.
     (5) After May 1st, but before August 1st, of each year in which a report is required by this section, the holder in possession of property presumed abandoned and subject to custody as unclaimed property under this chapter shall send written notice to the apparent owner at the last known address informing him or her that the holder is in possession of property subject to this chapter if:
     (a) The holder has in its records an address for the apparent owner which the holder's records do not disclose to be inaccurate;
     (b) The claim of the apparent owner is not barred by the statute of limitations; and
     (c) The property has a value of more than seventy-five dollars.

NEW SECTION.  Sec. 13   Sections 1 through 8 of this act constitute a new chapter in Title 19 RCW.

NEW SECTION.  Sec. 14   Sections 1 through 8 of this act apply to:
     (1) Gift certificates sold or issued on or after July 1, 2004; and
     (2) Those gift certificates presumed abandoned on or after July 1, 2004, and not reported as provided in RCW 63.29.170(4).

NEW SECTION.  Sec. 15   Sections 1 through 10 of this act take effect July 1, 2004.

NEW SECTION.  Sec. 16   Sections 11 and 12 of this act take effect January 1, 2005.