RELATING TO CONSUMER PROTECTION.

SB2797

THE SENATE

S.B. NO.

2797

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO CONSUMER PROTECTION
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
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The legislature finds that the COVID-19
pandemic devastated the economy, workforce, businesses, and livelihoods of many
people in the State.
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In the aftermath,
gift card scams have increased significantly, particularly through gift card
draining, in which nefarious individuals steal gift cards from store displays, then
copy card and personal identification numbers from the cards, and return the
cards to shelves.
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After honest consumers
purchase those gift cards and load them with value, the scammers then use the
stolen information to drain the cards of that value.
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The legislature believes that it is necessary
to shield consumers from these practices.

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The
legislature also believes that the State's current gift certificate law, which
also covers gift cards, needs to be updated.
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While the law contains several positive elements, including a
prohibition on periodic gift certificate service fees, the law can also be
enhanced to increase transparency and protections for consumers.

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Accordingly,
the purpose this Act is to:

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(1)
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Establish a new gift card fraud law,
under the scope of the unfair and deceptive practices law, which requires
merchants and third-party gift card resellers to take certain steps to prevent
gift card scams;

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(2)
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Require the conspicuous provision of
information regarding terms and conditions of gift certificates, regardless of
whether the cards are sold in person, electronically, or telephonically; and

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(3)
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Extend from two years to four years the
minimum redemption period for paper gift certificates.

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SECTION
2.
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Chapter 481B, Hawaii Revised
Statutes, is amended by adding a new part to be appropriately designated and to
read as follows:

"
Part
.
�
GIFT
CARD FRAUD

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�481B�A
�
Definitions.
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As used in this part:

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"Closed-loop gift card" means a card, code, or device that is:

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(1)
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Issued to a consumer on a prepaid basis
primarily for personal, family, or household purposes in a specified amount,
regardless of whether that amount may be increased or reloaded in exchange for
payment; and

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(2)
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Redeemable on presentation by a
consumer at a single merchant or a group of affiliated merchants.

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"Gift
card" means a
closed-loop gift
card or an open-loop gift card.

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"Merchant"
means a person who directly or indirectly offers or makes available to
consumers any consumer goods, consumer services, consumer realty, or consumer
credit.

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"Merchant"
includes a person:

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(1)
�
Who, directly or indirectly, purchases
or offers to purchase any consumer goods or consumer realty from a consumer; or

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(2)
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In the business of paying off consumer
debt in connection with the purchase of any consumer goods or consumer realty
from a consumer.

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"Open-loop
gift card" means a card, code, or device that is:

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(1)
�
Issued to a consumer on a prepaid basis
primarily for personal, family, or household purposes in a specified amount,
regardless of whether that amount may be increased or reloaded in exchange for
payment;

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(2)
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Payment card network branded; and

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(3)
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Either:

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(A)
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Redeemable on presentation at multiple
unaffiliated merchants for goods or services within the payment card network;
or

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(B)
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Usable at an automated teller machine.

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"Person"
means an individual, corporation, business trust, statutory trust, estate,
trust, partnership, association, two or more persons having a joint or common
interest, or any other legal or commercial entity.

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"Third-party
gift card reseller" means a merchant that, without authorization from or
affiliation with the business entity issuing a gift card, is engaged in the
business of:

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(1)
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Buying gift cards on behalf of
consumers; or

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(2)
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Reselling gift cards to consumers.

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�481B�B
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Merchants;
sales of gift cards.
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(a)
�
Except
as provided in subsection (b), a merchant shall not knowingly sell
a
gift card
to a consumer unless:

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(1)
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All gift cards for sale are locked in
an enclosed display case, which may be opened only by the merchant or the
merchant's employees;

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(2)
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The merchant conspicuously displays a
notice in substantially the same form as the model notice created pursuant to
paragraph (1) of section 481B-D:

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(A)
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For an in-person sale, at or near the
physical location where:

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(i)
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The
gift card is displayed for sale; or

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(ii)
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The
sale occurs; or

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(B)
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For
an online sale, on the webpage:

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(i)
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In
which the gift card is offered for sale; or

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(ii)
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That is displayed before the sale is
finalized;

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(3)
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For an in-person sale of an open-loop
gift card, the gift card is enclosed in secure packaging that:

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(A)
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Is sealed in a manner that is not
easily opened without producing signs of tampering;

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(B)
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Except
as provided subparagraph (C), conceals all numeric codes specific to the
activation or redemption of the gift card, including any bar code, card
verification value number, personal identification number, or activation code;

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(C)
�
Displays
an activation code, bar code, or other activation data only if the packing used
is more secure than it otherwise would be if the data were fully concealed; and

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(D)
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Includes
a warning that states the following or uses language substantially similar to
the following: "Do not sell or purchase if packaging has been broken or
indicates tampering"; and

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(4)
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For an in-person sale of a closed-loop
gift card, the gift card is presented in packaging that:

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(A)
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Is not easily removed or replaced
without signs of tampering and:

��������������
(i)
�
Fully conceals or covers all numeric
codes specific to the redemption of the gift card; or

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(ii)
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Partially conceals or covers all
numeric codes specific to redemption of the gift card; provided that the
partial concealment or covering is more secure than full concealment of
covering; and

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(B)
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Includes
a warning that states the following or uses language substantially similar to
the following: "Do not sell or purchase if packaging has been broken or
indicates tampering".

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(b)
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A merchant may sell a gift card that is not
enclosed in secure packaging as otherwise required under subsection (a) if:

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(1)
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The gift card is a chip-enabled,
numberless card that is activated by a consumer after registering the card on
the card issuer's website; or

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(2)
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The gift card is sold exclusively by:

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(A)
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A merchant for use only at the retail
establishment of the merchant;

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(B)
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A group of affiliated merchants for use
only at the retail establishments of the affiliated merchants; and

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(C
)
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Is secured in a physical location
within the merchant's retail establishment that is accessible only by an
employee of the merchant.

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�481B�C
�
Merchants;
employee training.
�
A
merchant that displays a gift card for sale at a retail establishment shall
provide training to all employees of the merchant whose duties regularly
include the sale of gift cards to consumers.
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The training, at minimum, shall instruct employees how to identify and
respond to gift card fraud in accordance with the guidelines established
pursuant
to paragraph (2) of section 481B-D
.

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�481B�D
�
Model
notice; guidelines.
�
The
office of consumer protection shall:

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(1)
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Create a model notice regarding gift
cards for use by merchants that:

���������
(A)
�
Cautions a consumer about gift card
scams;

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(B)
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Instructs a consumer on what to do if
the consumer suspects the consumer may be a victim of a gift card scam; and

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(C)
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Indicates that a gift card may not be
used to pay debt;

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(2)
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Issue guidelines regarding the
detection and prevention of gift card fraud that include:

���������
(A)
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Information that raises public
awareness about gift card fraud;

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(B)
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Information about how common gift card
fraud schemes work; and

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(C)
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Best practices for a merchant to
prevent gift card fraud; and

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(3)
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Make available online and periodically
update the model notice and guidelines required under this section.

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�481B�E
�
Third-party
gift card resellers; information.
�
(a)
�
Subject to subsection (b), when a third-party
gift card reseller buys or sells a gift card as part of a transaction occurring
in the State, the third-party gift card reseller shall record and for at least
three years maintain a copy of the following information, as applicable:

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(1)
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The date of the transaction;

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(2)
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The name of the person who conducted
the transaction;

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(3)
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The name, age, and address of the
seller of the gift card;

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(4)
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The seller's and consumer's driver's
license number or identification card number;

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(5)
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A description of the purchased gift
card, including:

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(A)
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The retailer for which the gift card is
intended for use; and

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(B)
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The gift card number;

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(6)
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The specific amount issued on the gift
card;

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(7)
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The prices paid to conduct the transaction;
and

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(8)
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The signature of the consumer.

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(b)
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The information recorded and maintained under
subsection (a) shall chronologically be written in ink or logged into a secure
database, software system, or other similar technology platform.
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R
ecorded information may not be
destroyed, altered, or erased; provided that a handwritten correction may be
made to an entry of information by drawing a line of ink through the entry in a
manner that retains legibility.

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(c)
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Information recorded under this section shall
be open to inspection by any duly authorized law enforcement officer:

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(1)
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During the ordinary business hours of
the third-party gift card reseller; or

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(2)
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At any other reasonable time.

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(d)
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A third-party gift card reseller, including
an agent or employee of the third-party gift card reseller, shall not:

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(1)
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Fail to make an entry of or falsify,
destroy, or remove any information required to be recorded and maintained under
this section;

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(2)
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Refuse to allow any duly authorized law
enforcement officer to inspect a record of information or gift cards in the
third-party gift card reseller's possession during the ordinary business hours
of the reseller or at any reasonable time; or

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(3)
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Fail to maintain a record of each gift card
transaction for at least three years.

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(e)
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On the filing of an official report to a law
enforcement agency by any person alleging to be a victim of theft of one or
more gift cards with an aggregate value exceeding $500, the law enforcement
agency may request that the issuer of the gift cards or the issuer's agents
preserve and provide to the law enforcement agency all relevant evidence
reasonably foreseeable to be of assistance to future criminal actions in
accordance with state law."

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SECTION

3
.
�
Section
481B-13, Hawaii Revised Statutes, is amended by amending subsection (b) to read
as follows:

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"(b)
�
[
The
]
Information regarding the

date of issuance
, any applicable fees,
and the expiration date shall be
clearly
and conspicuously
identified on the face of the gift certificate[
,
]
or[
, if an electronic card with a banked dollar value, clearly printed upon
a sales receipt transferred to the purchaser of the electronic card upon the
completed transaction.
]
its packaging; provided that if the gift certificate
is sold or issued electronically, the seller or issuer shall include a
conspicuous written statement of the foregoing information in the electronic
message; provided further that if the gift card is sold or issued by telephonic
means, the seller or issuer shall state the foregoing information to the
purchaser before the sale.
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Terms and
conditions of the gift certificate shall not be changed after the date of
purchase or issuance, unless the change benefits the consumer.

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The
expiration date shall be not less than five years after the date of issuance;
provided that the expiration date of certificates issued
only in paper form shall be not less than [
two
]
four
years after
the date of issuance.
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If the gift
certificate does not have an expiration date, it shall be valid in perpetuity."

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SECTION
4.
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In codifying the new sections added
by section 2 of this Act, the revisor of statutes shall substitute appropriate
section numbers for the letters used in designating the new sections in this
Act.

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SECTION
5.
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This Act does not affect rights and
duties that matured, penalties that were incurred, and proceedings that were
begun before its effective date.

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SECTION
6.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.

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SECTION
7.
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This Act shall take effect upon its
approval.

INTRODUCED BY:

_____________________________

Report Title:

OCP; Gift
Cards; Gift Certificates; Consumers; Fraud Prevention; Transparency

Description:

Establishes a new gift card fraud law, under the scope of
unfair and deceptive practices law, which requires merchants and third-party
gift card resellers to take certain steps to prevent gift card scams.
�
Requires the Office of Consumer Protection to
create model notices and issue certain guidelines.
�
Requires the conspicuous provision of
information regarding terms and conditions of gift certificates, regardless of
whether the cards are sold in person, electronically, or telephonically.
�
Extends the minimum redemption period for
paper gift certificates from two to four years.
�

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.