Gift-card holders would get more cash back under Senate bill

Consumers could get more cash back from unused gift cards under a bill unveiled Tuesday at the state Capitol.

Senate Bill 885 by state Sen. Ellen Corbett, D-San Leandro, would require retailers to give cash back on cards if the remaining balance is less than $20. Corbett's 2007 bill established the current limit of less than $10.

The bill would require the new limit to appear in large type on the card itself. It would also eliminate dormancy fees, which are allowed in certain circumstances.

There's a lot of unused gift card value at stake. Nearly $5 billion goes unspent each year, according to Massachusetts-based research firm TowerGroup.

Retailers vowed Tuesday to oppose SB 885, saying it creates cash-register headaches and goes against the purpose of gift cards.

Corbett said expanding the cash-back limit ensures that consumers in tough economic times get access to the full amount on their gift cards, which could "make the difference in paying their bills and making ends meet." She hopes the bill will turn gift cards into "no-fee, no-hassle" consumer products.

But the under-$20 proposal raises concerns among retailers, according to Maureen Riehl, spokeswoman for the National Retail Federation in Washington, D.C. Compared with other states, California's current $10 cash-back limit is already high, but going up to $20 is "definitely setting a new bar," she said.

"It's contrary to what gift cards are supposed to be about," she added, noting that cards are intended to be redeemed for merchandise or food. "It creates some fund-management issues when you're dealing with cash back vs. merchandise."

Bill Dombrowski, president of the California Retailers Association, said his group will oppose the bill. For store, restaurant and theater owners, the $20 limit is "ridiculously high," he said. "We reached a compromise to raise it to $10 (three years ago) and we're still trying to implement that."

A number of consumers, including Sacramentan Janice Critchlow, have reported trouble getting some retailers to abide by the current law. Critchlow, who spoke at Tuesday's hearing, described in a Bee story earlier this month her trouble trying to cash several dozen $5 gift cards at various fast-food outlets.

Last summer, district attorneys in Monterey, Shasta and Sonoma counties reached a settlement with Starbucks over complaints that the coffee retailer failed to abide by the state's gift card laws. Starbucks paid $225,000 in civil penalties