2004 Legislative Update from the
Message from the Chair
This year the Committee again acted to protect individual privacy by advancing legislation designed to enhance consumer privacy as well as legislation that would require debt collectors to send notice of consumers’ rights under state law along with their debt collection correspondence.
I am very proud of these and many other accomplishments. The Committee on Consumer Affairs and Protection will continue its goal of protecting consumers throughout all of New York State.
The sale of gift cards has grown considerably and produced approximately $45 billion in sales in 2003. In addition to the face value of the gift card, additional fees are often part of the cost. Upfront fees, reactivation and monthly carrying charges and dormancy fees are a few of the other costs passed on to consumers.
When consumers purchase gift cards or gift certificates, they should be clearly informed what fees, if any, are imposed by issuers. Dormancy fees are monthly charges assessed against the gift card or certificate’s balance if it has not been used for a specified period of time. This fee is particularly troublesome because in many instances, it is unexpected. By the time a consumer uses their card or certificate, the fee assessed by the issuer for dormancy may have significantly decreased the value of the card or certificate, leaving the consumer with less purchasing power than he or she anticipated.
The legislature passed bills A.10333-B (Pheffer)/S.6612-B (Skelos) and A.10334-A (Pheffer)/S.6611-A (Fuschillo) in order to protect consumers from abusive practices by businesses who sell gift cards and gift certificates.
This legislation would prohibit monthly service fees until the thirteenth month of dormancy. It is only reasonable that a consumer expect to retain the purchase value of a certificate or card for at least one year before an issuer may assess fees for its non-use.
In addition to monthly fees for dormancy, some issuers charge fees on a retroactive basis and deplete the value of an unused certificate or card more rapidly. This legislation would also prohibit the assessment of any retroactive fees against the balance of the certificate or card. As well, these bills would require notice to the purchaser and provide improved notice to the recipient that terms and conditions are applied to the gift card. Notice is to appear at the point of purchase, whether by mail, phone, over the internet, or in person, and on advertisements. These bills have been signed by the Governor and became effective in October 2004.
The Committee will continue to monitor the marketplace, because it is likely these and other prepaid and electronic payment devices will continue to develop new features and uses. Electronic cards can be used to limit the purpose for which the card may be used. For example, a college student can be given a travel-card that can only be used for purposes of travel (e.g., railroad, airline or bus tickets).
Debt is a part of consumers’ lives. Some are able to manage their debt without a problem, while others cannot. Consumers who cannot manage their debt may find themselves the subjects of debt collection. Faced with the inability to pay off a loan or credit card bill, consumers may be contacted by creditors as well as professional debt collectors. Abuses have arisen in the debt collection area. Creditors and debt collectors have contacted consumers in ways that violate the law: at work, late at night and through unauthorized third parties. An example of an abusive practice was a report of a principal creditor parking a hearse in front of an individual’s home with “A deadbeat lives here” written on it. These and other practices are not only outside the law, they are outrageous and must stop.
An effective way to curb abuses is to inform consumers of the limitations placed on principal creditors by New York law. In response to the need to inform consumers, I introduced A.3549.
This bill would require a notice of consumer’s rights under the New York law regulating debt collection practices to be included in each initial correspondence on a past due debt. The notice would contain information such as when a principal creditor may contact a debtor about the debt owed and the fact that a principal creditor cannot disclose information affecting a consumer debtor’s reputation for creditworthiness if the principal creditor knows or has reason to know that the information is false.
Wild or Farm Raised Salmon
To help consumers make informed choices regarding farm or wild salmon, the Assembly passed A.9424-B (Grodenchik). This bill would require that farm-raised and wild salmon be labeled accordingly. The labels would be posted at the location where the fish are displayed so that consumers would be able to make informed choices when purchasing the salmon. We hope that the Senate will also act on this legislation.
Purchasing Air Bags
Global Positioning System Prohibition
In response to the use of GPS technology to impose additional fees on car renters, I introduced A.11256-A (Pheffer). This bill would prohibit the use of GPS technology by rental vehicle companies to determine or impose fees or penalties on an authorized driver. This bill is awaiting action by the Governor.
Since 1999, the Assembly Consumer Affairs and Protection Committee has moved a bill that would prohibit the sale or lease of any consumer’s electronic mail address without the affirmative consent of the consumer. Recognizing the harm to consumers resulting from this practice, the federal government enacted the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act (or the CAN-SPAM Act) of 2003. This law, among other provisions, prohibits "harvesting," which is the pulling of random e-mail addresses from the Internet through manual and automated methods.
In addition to the CAN-SPAM Act, the federal government enacted the Fair and Accurate Credit Transactions Act (FACTA). This Act amended the Fair Credit Reporting Act. FACTA contains two initiatives supported by the Assembly Consumer Affairs and Protection Committee. The first issue is a free consumer credit report. FACTA mandates one free credit report annually. The free credit reports will become available to consumers in cumulative stages over a period of nine months, rolling-out from west to east beginning December 1, 2004. The entire transition will be complete by September 1, 2005.
The second Committee initiative covered in FACTA is the truncation of credit card and social security numbers. Credit and debit card numbers will be truncated on consumer receipts and this too will be implemented over an extended period. As well, consumers will be able to request that their social security number be truncated in their credit report.
Penalty for Deceptive Advertising
Continuing Education for Retail Food Stores
This bill would establish a continuing education certification program for retail food stores that engage in food preparation. Under this bill, every grocery store that prepares food will have an individual assigned to it who has completed a food handling and safety program approved by the Department of Agriculture and Markets. Minimum training would consist of eight hours of course work over a two-year period. This bill will help raise the food safety standards in the industry, protect the public health, and provide necessary training before sanitation failures occur.
Assemblywoman Audrey I. Pheffer
New York State Assembly
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