Rhode Island law bars merchants from charging maintenance fees or imposing expiration dates on gift certificates and gift cards. Now a legislator wants to bar surcharges such as the $2.50 fee tacked on to every Providence Place mall gift card.
“They found a loophole, so they don’t call it maintenance fees; instead they call it a surcharge,” said Sen. Christopher B. Maselli, D-Johnston, who is sponsoring a bill that would forbid businesses to charge “a surcharge of any kind” on gift certificates or gift cards, including prepaid long-distance calling cards.
The same bill was introduced in the House by Rep. Stephen R. Ucci, D-Johnston.
“It has broader language so it should cover all fees,” Maselli said. “This is a good consumer piece of legislation because this seems like a useless fee that is just a way to make money.”
But Karyn Houde, associate marketing manager for Providence Place at General Growth Management Inc., said that the fee is necessary.
“Our $2.50 purchase fee makes it possible for us and our partners – American Express – to cover expenses associated with maintaining financial records and providing 24-hour customer service and other administrative services,” she said.
“Customers are well aware of the fee and willingly choose to pay it in exchange for the convenience of giving gift cards,” Houde added. “Without the fee, we and American Express would lose money, because unlike single-store gift cards, multi-store mall cards are not spent to make purchases from us. Rather, they are used to make purchases at hundreds of stores and restaurants at our malls.”
Without a fee, she added, “we and American Express would be forced to seriously consider ceasing the sale of mall gift cards in Rhode Island.
“We already ceased online and mail sales of gift cards to Rhode Island addresses, because current state law there is already more restrictive than in most of the rest of the country,” Houde said.
Maselli, however, said that argument is guff.
“How ridiculous, how petty and how greedy can these businesses get?” he said in a news release. “If you sell someone a $50 gift card, and you receive $50 from the purchaser, what’s the point of charging more, except pure and simple greed? If you are a business and you’re losing money by selling gift cards, then stop selling them. But don’t continue to find new ways to rip off the consumer.”
Ucci added that there are other benefits to selling gift cards that the businesses aren’t mentioning.
“They get the use of the people’s money until they are redeemed, and 30 percent or more of gift cards are never used,” he said. “It’s really unfair to the consumer.”
