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New law makes gift cards more consumer-friendly

Posted December 17, 2007 10:00 pm

Adriana Colindres

A new state law taking effect next month aims to make gift cards and gift certificates more consumer-friendly by giving recipients five years to spend them.

In addition, the recipients won't be charged fees that diminish the value of the card or certificate. Some gift cards presently charge consumers a fee if they don't spend all of the card's value within a specified period of time.

But under the new law, the recipient of a $50 gift card - for example - will be able to spend the entire $50, said the measure's House sponsor, Democratic Rep. Jack Franks of Woodstock.

Franks had pushed the gift-card legislation for the past few years before succeeding this year with House Bill 369. It won overwhelming approval in the House and Senate and was signed by Gov. Rod Blagojevich.

The lawmaker's effort started when his son, now 12, tried to use a gift card and money he had saved to buy an aluminum baseball bat. The boy discovered that much of the card's value "had eroded because he hadn't used it within a certain amount of time," Franks said Monday.

Gift cards have gained in popularity over the years because they are convenient, particularly when gift-givers struggle about what to get for people who "are hard to buy for," Franks said.

"It's a huge business," he said. "It's very lucrative for retailers."

Retailers get paid when someone buys a gift card as a present, Franks said, adding that it is unfair for them to charge post-purchase fees.

"That's just wrong. They're ripping off consumers," he said.

The Illinois Retail Merchants Association went along with Franks' bill after it was rewritten to include a five-year expiration date for gift cards. Originally, the legislation would have prohibited any expiration date.

That revision "recognizes that retailers have burdens as well when it comes to administering open accounts," said Rob Karr, vice president of government and member relations for the Retail Merchants Association.

Sen. Mike Jacobs, D-East Moline, was the lone member of the General Assembly to vote "no" on the gift-card legislation.

"Consumers need friendly laws, but this, in my opinion, is going too far," Jacobs said.

"I think that it could become a nightmare for retailers," he added. "If a retailer issues a card and they put an expiration date on there, I think people have a responsibility to spend that money in a year."

Adriana Colindres can be reached at (217) 782-6292 or adriana.colindres@sj-r.com.

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