Leawood, Kan. – June 30, 2023: Earlier this month the Senate and the House passed Senate Bill 759 and House Bill 5732 (together, the “Twin Bills”) amending Rhode Island’s Commercial Law, General Regulatory Provisions to: (1) require signage at points-of-sale warning of potential scams involving gift cards, (2) require the State of Rhode Island Department of Business Regulation to provide model gift card fraud disclosures, and (3) provide for a civil penalty for violations of the provisions. On June 20, 2023, the Governor signed the Twin Bills into law. RI Gen L § 6-59-1 through 6-59-3 (2023). The new law took effect immediately upon it being signed into law.
Card Compliant has received informal guidance from Rhode Island that a short grace period for implementation and from enforcement may be provided given the immediate effective date of the new law.
Specifically related to the required disclosures, the new law requires, that: “No person, firm, partnership, association, retailer or corporation shall sell a gift card to a purchaser unless the seller displays a conspicuous notice, in a form prescribed by the department of business regulation, at or near where the gift card is displayed and at or near the physical location where the sale occurs, that: (1) [c]autions the purchaser about prepaid card scams; and (2) [i]nstructs the purchaser on what to do if they suspect they might be a potential victim of such a scam.” RI Gen L § 6-59-2.
It defines “gift card” to mean “a written promise or electronic payment device that: (1) [i]s usable at a single merchant or an affiliated group of merchants that share the same name, mark, or logo, or is usable at multiple, unaffiliated merchants or service providers; (2) [i]s issued in a specific amount; (3) [m]ay or may not be increased in value or reloaded; (4) [i]s purchased and/or loaded on a prepaid basis for the future purchase or delivery of any goods or services; and (5) [i]s honored upon presentation.” RI Gen L § 6-59-1.
Pursuant to RI Gen L § 6-59-2, the State of Rhode Island Department of Business Regulation is required to publish and has published model notices in both English and Spanish for this gift card fraud disclosure. The following are examples of those model notices:
Proposed sizes for these notices are 3.6 x 3.4, 3.7 x 2.125 and 5.25 x 8.25.
To view and print the displays on the department’s website, click this link: RI Department of Business Regulation Information and Posters.
Regarding penalties, the new law specifies that, “any person, firm, partnership, association, corporation or retail mercantile establishment that violates the provisions of the chapter shall be subject to a civil penalty in the amount of two hundred fifty dollars ($250).” RI Gen L § 6-59-3.
For additional information on how to prevent gift card scams you can visit https://stopgiftcardscams.com/.
To read the law as passed: Gift Card Fraud, Chapter 59.
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The Compliance Libraries provide a one stop location for comprehensive information on the laws, rules and standards regulating gift cards. Its range includes federal and state laws, GAAP accounting standards and tax rules along with other helpful items.
For more information visit www.compliancelibraries.com.
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