Annapolis, MD - Maryland’s new law to protect the value of gift cards and gift certificates goes into effect on July 1. Stemming from legislation that was introduced in the 2005 General Assembly session by Senator Kathy Klausmeier (D-Baltimore County) and Delegate Neil Quinter (D-Howard County), the new law protects consumers by restricting the expiration of gift cards and the charging of "fees" that diminish the value of the cards. The bill passed the Maryland General Assembly in the 2005 session, with a delayed effective date. Klausmeier and Quinter agreed to the delayed effective date in 2005 as a necessary compromise to secure the passage of the legislation. The law applies to new gift cards and certificates sold in Maryland on and after July 1.

The new law provides that:

• Gift cards and certificates sold by a single retailer or chain will not be subject to expiration or fees for at least four years from the date of sale
• Any expiration date or fees must be printed clearly on the card or an envelope in which it is sold, in at least 10 point font
• Gift cards sold for use at multiple stores by credit card companies or malls can impose shorter expiration times or service fees, but the expiration date or service fee must be printed clearly on the back or front of the gift card in at least 10 point font
• A term or condition that is disclosed on the card cannot be changed after the card is sold, unless the change benefits the consumer
• The sale of gift cards or gift certificates not in compliance with the bill is an unfair trade practice.

Gift cards have become very big business. Consumers bought $45 billion worth of gift cards in 2004, and that figure was expected to mushroom to $54 billion in 2005. The National Retail Federation projected that 3 out of every 4 shoppers would bought gift cards during the 2005 holiday season.

"I had constituents get up at community meetings and pull out their wallets and show me their gift cards that had expired," Senator Klausmeier said. "When people lay out their cash, they should be able to get what they paid for. I am extremely excited that this important safeguard is going into effect."

Delegate Quinter testified in support of this legislation that "too many of these consumers are paying something, but getting nothing. Sellers put expiration dates on gift cards, rendering them completely valueless, or charge ‘service fees’, which whittle away the card’s value to nothing. However, a survey found that 63% of gift card purchasers were unaware of these fees. In fact 10% of gift cards are never redeemed, and another 20% are devalued by service fees-doing the math, this results in a windfall to sellers of some $15 billion a year. The retailers are getting money for nothing."

"The need for this legislation was brought to my attention by one of my constituents, in fact, one of my most important constituents - my wife. She went to redeem a gift card for 20-some dollars from The Children’s Place, which sells children’s clothing, that she had received for making a return to the store. We have two older children, so, on our state legislator’s salary, our third and youngest child wears a lot of hand-me-downs, and she didn’t use the card right away. When she went to buy our son a new winter coat, she was told that the card was now worthless, that service fees had devalued it to nothing. Now, my wife is a forceful person and a strong advocate for our family, but she got no relief from the store. They told her to call a customer service number, which she later did. When she called them, the first thing they did was to check whether she was from a state which has passed legislation to ban these service fees. Because she’s from Maryland, which has no protection for consumers from these practices, she was out of luck. Being the forceful advocate that she is, she continued to plead her case and did eventually receive the credit. However, Maryland citizens who are not willing to jump through these hoops, or do not have my wife’s persuasive abilities, would be out of luck."

Phil DeFlavis, a Maryland consumer and the owner of a hair salon in Baltimore County, testified at both the House and Senate hearings about how he had lost several hundred dollars in value from expired gift cards. "It was just great that Delegate Quinter and Senator Klausmeier were able to work with me to get this done," said DeFlavis. "This legislation has been a no-brainer from day one. If other places don't like it, they can not sell gift cards."

Attorney General J. Joseph Curran, Jr. and Comptroller William Donald Schaefer both testified personally in support of the legislation. The Maryland Consumer Rights Coalition also supported the bills, and the Maryland Bankers Association supported the final version of the legislation.

"This legislation helps ensure that Maryland consumers get their money’s worth from gift cards, and I’m very happy to finally see it become effective," said Quinter.

Senator Klausmeier represents District 8, which is located in Baltimore County. Delegate Quinter represents District 13, which is located in Howard County.