Lawmakers vow to go after gift cards 'that keep on taking'

(AP) - Sen. Chuck Wiger took a pair of scissors to a gift card Wednesday to illustrate how much hidden terms can erode the card's face value.

Snipping away as plastic pieces zinged off into the air, he said, "Several months later the value has gone down on that card, and then again, and then again. Where there's nothing left, that is a rip-off."

As the holiday shopping season cranks up, the North St. Paul Democrat and two colleagues promised legislation to ban expiration dates and fees on gift cards. They said too many consumers are being duped and never get their money's worth from the cards.

Consumers nationwide will buy almost $25 billion worth of gift cards during this year's holiday shopping season, according to the National Retail Federation. California and a handful of states prohibit retailers from letting the cards expire, and Tennessee is among several states that restrict gift card fees. Minnesota doesn't regulate the cards.

If you don't use it, you lose it. I don't see a problem with that.

A bill to do so passed the DFL-led Minnesota Senate in 2005 but never got a hearing in the Republican-controlled House. Next year, Democrats will take over the House and Rep. Joe Atkins, DFL-Inver Grove Heights, said he expects the bill to get full consideration.

"This can either be the gift that keeps on giving or the gift that keeps on taking," Atkins said. "The goal here is just to make sure it is what people expect to purchase."

Still, Republican Rep. Larry Howes said the proposal might not find enough support to pass. The state has bigger worries, he said, and retailers should be able to recoup something for the convenience of gift cards.

"If you don't use it, you lose it," Howes said. "I don't see a problem with that."

The Minnesota Retailers Association opposes government regulation of gift cards. The group's president, Buzz Anderson, said most cards don't expire because consumers don't like expiration dates. But he said the option is important for small independent stores that face an "accounting nightmare" if they have to carry the value of unredeemed cards on their books indefinitely.

"If you don't like the terms on a card, don't buy the card," Anderson said. "Nobody's holding a gun to your head."

More state regulations are likely as gift cards grow in popularity, said attorney David Weber, who practices franchise law at Fredrikson & Byron in Minneapolis.

"You don't want to sit down at Christmas and attach a 1½ page contract to your gift," Weber said.

Gov. Tim Pawlenty hasn't taken a stance on gift cards, but wants expiration dates and other terms displayed prominently on the front of the cards, spokesman Brian McClung said.

The Democrats' proposal would require retailers to honor gift cards indefinitely and prohibit penalties for not using the card. It would also let consumers get cash back for the last $5 of card value and allow them to apply gift card balances to debts they owe the retailer.

(Copyright 2006 by The Associated Press. All Rights Reserved.)

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