Update: A new version of SB 756 passed the Oregon Senate in early May 2011, more detail here.
- All gift cards must be redeemable for cash (or check) if the balance is less than $10 and the card has been used at least once.
- All gift card must be reloadable.
1. Redeemable For Cash: Great Idea
Requiring merchants to offer cash back for used gift cards with a balance less than $10 will definitely help make gift cards better for consumers. That's because there are very few companies who offer a cash back policy unless required by state law. In short, ScripSmart likes to see cash back policies because we don't believe consumers should be required to pay more than the original value of a gift card in order to receive the full value of their gift.
In fact, such cash back requirements are an important factor in determining the consumer friendliness of a state's gift card laws. If this item were to become law, it would push Oregon's State Law Grade form a B to an A. Cheers to Senator Verger for bringing this to the table.
2. Reloadable Requirement: Not A Great Idea
Oregon would be the first state to implement a law requiring all gift cards be reloadable. It's my understanding the motivation behind this requirement is not one of consumer protection, but environmental protection. The line of thinking is quite simple, perhaps too simple:
- plastic gift cards damage the environment when they are discarded,
- many gift cards are issued each year and
- if gift cards were reloadable, less gift cards would be tossed into the garbage because
- consumers would be able to reload them instead of purchasing a new gift card.
Frankly, I don't think this portion of the bill is a good idea. Here are some thoughts why:
Minimal Environmental Impact
Outside of using a gift card as part of a loyalty program, the reloading of gift cards is simply not very popular among consumers. Most of us simply receive a gift card as a gift from another person, redeem the item and disregard the gift card after the balance reaches zero. While there is a trend toward budgeting with gift cards, it's a very small portion of total gift cards usage. Most consumers are just not very interested in continuing to reload a gift card and tying up our money with a merchant.
The Wrong Place For Action
Protecting the environment is a noble cause and those who are forward thinkers should be applauded. However, there are many more uses for plastic cards other than gift cards: ID cards, credit cards, driver's licenses, library cards, membership cards and shopper discount cards to name a few. It's not quite clear to me why this is a good place for enforcing a law to protect the environment. In fact, the laws which SB 756 amends are listed under "Chapter 646A — Trade Regulation" and browsing through the chapter, I see no other legislation aimed at protecting the environment.
Oddly enough, and due to Oregon's definition of a gift card, it appears this law would also apply to eGift Cards which have no environmental impact and also apply to paper gift certificates which just doesn't make sense. Furthermore, phone cards and bank-issued gift cards (Visa, Mastercard logos) would be excluded from this law as would any other gift card "usable with more than one seller of goods or services".
For the record, here is the current definiton of a gift card according to Chapter 646A:
...“gift card” means a prefunded record evidencing a promise that the issuer will provide goods or services to the owner of the record in the amount shown in the record. “Gift card” does not include prepaid telephone calling cards, prepaid commercial mobile radio services as defined in 47 C.F.R. 20.3 or any gift card usable with more than one seller of goods or services.
Finally, the bill will "apply to gift cards sold on or after the effective date of this 2011 Act." In other words, there will be little notice to gift card issuers. If businesses have gift card stock with is not compatible with the new regulations, they'll have to discard the unused product which would result in even more waste.
If Oregon law makers are interested in protecting the environment form plastic, they should enact a law which addresses plastic or at the very least, all plastic cards. I suggest looking towards the recycling industry for inspiration; perhaps plastic cards should be manufactured from recycled material or even biodegradable materials.
One Last Note
ScripSmart's State Law Grades do not currently factor in the notion of a state requiring merchants to offer reloadable gift cards and I'm not sure it ever will because I don't see a big benefit for consumers. However, a gift card program which is reloadable experiences a slight boost in it's Gift Card Score. Such an impact is rather small and given based on the belief: a reloadable gift card program is a more robust offering and gives the consumer more options in how they use the gift card. It's a nice to have, but not somthing most of use will ever use.