Leawood, Kan. – February 9, 2024: Last month, the Nebraska Legislature introduced Legislative Bill 1332 (“LB 1332”) with its intent to be adopted and cited as the Prepaid Card Consumer Protection Act (the “Act”). This week the Banking, Commerce and Insurance committee voted to adopt LB 1332.
With very limited exceptions for loyalty and charitable cards where no value is given, the proposed Act applies to prepaid cards and would make it unlawful for any person or entity to: (a) charge any fee, including a maintenance, service, or inactivity fee, on a prepaid card; or (b) place an expiration date on a prepaid card or otherwise limit the time for the redemption of a prepaid card. 2024 LB1332 Sec. 3(2).
The LB 1332 defines prepaid card to mean “a record evidencing a promise, made for monetary consideration, by a seller or issuer that goods or services will be provided to the owner of the record to the value shown in the record. A prepaid card includes, but is not limited to, a: (a) [r]ecord that contains a microprocessor chip, magnetic strip, or other storage medium that is prefunded and for which the value is adjusted upon each use; (b) [g]ift certificate; (c) [s]tored-value card or certificate;(d) [s]tore card; or (e) [p]repaid long distance telephone service that is activated by a prepaid card that requires dialing an access number or an access code in addition to dialing the telephone number to which the user of the prepaid card seeks to connect.” 2024 LB1332 Sec. 3(1)(a)-(e). It seems that LB 1332 does not create an exemption from the prohibit on fess or expiration dates for those cards used at multiple unaffiliated retailers. Id.
In addition, LB 1332 further proposes that when a prepaid card has a cash value of ten dollars ($10.00) or less, the card issuer shall redeem the card for cash at the customer’s request. 2024 LB1332 Sec. 3(3). Presently, Nebraska does not have any law that requires redemption of cash to a consumer from a prepaid card. Again, there does not seem to be an exemption for cards used at multiple unaffiliated retailers for the requirement to redeem the cards for cash when the balance is ten ($10.00) or less.
There are limited exceptions to this bill. Prepaid cards that are (a) [i]ssued pursuant to an awards or loyalty program where no money or thing of value was given in exchange for the prepaid card; or (b) [d]onated to a charitable organization without any money or other thing of value being given in exchange for the prepaid card” are exempted, and therefore they may contain expiration dates and they do not have a mandatory cash back redemption. 2024 LB1332 Sec. 3(4). However, LB 1332 would require that any prepaid card that is permitted to contain an expiration date must disclose that expiration date “clearly and legibly on the prepaid card.” 2024 LB1332 Sec. 3(5).
The Bill assigns the enforcement power of this law to the Attorney General or the county attorney in the district court of the county in which the violation occurred. The civil penalty can be up to $1,000 for each violation. 2024 LB1332 Sec. 4.
If LB 1332 passes and is approved by the Governor, it provides no specific effective date. Thus, it will likely be effective on or about July 18, 2024. Card Compliant will continue to monitor Nebraska for the proposed legislation and provide updates as we receive them.
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