Connecticut Bill to Require Cash Back on Small Balance Gift Cards

Connecticut is on the verge of joining a growing number of states that require gift card issuers to issue cash back on small balances remaining on gift cards, as HB 5664 awaits the governor's signature. Connecticut Governor Dan Malloy is expected to sign the legislation that would require retailers in the state to issue cash back on balances under $3 after a purchase has been made. The $3 limit is a compromise from an original $10 cash back. Once signed, the law becomes effective October 1, 2016.

The bill also expands the definition of gift card, to include recent changes in technology as electronic gift cards have been introduced. Fortunately, there is a long list of exceptions in the definition, including general use prepaid cards, loyalty cards and cards sold below face value. The new law also would not apply to issuers without a retail establishment in the state, protecting online and out-of-state stores.

Retailers should be especially diligent about training front-line staff to properly issue cash refunds in states that require it. Barganier is aware of attorneys in California and elsewhere seeking cases where consumers have been denied cash back upon request. These attorneys then seek class action status. Google, SoulCycle, and Abercrombie are among the companies that have been involved in gift card litigation recently.

See Also:
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Overreaching State Authority in Unclaimed Property Audits
New Jersey Eliminates Gift Card Data Collection Requirement