Florida Legislation Re; Gift Certificates

[tkhayes 348]

The Florida Senate just passed a bill, yet to be signed, but will likely pass through to law, regarding the handling of gift cards, gift certificates, etc.

Basically they are concerned about cash gift cards etc expiring and having fees added to them to devalue them.

The link to the bill is http://www.flsenate.gov/cgi-bin/view_page.pl?Tab=session&Submenu=1&FT=D&File=sb1638er.html&Directory=session/2007/Senate/bills/billtext/html/

and if I read it right, you cna apply a 3 year expiry to a charity donation, a 1 yr expiry to somethign given as an employee incentive, but NO e[pxiry dates whatsoever to gift certificates.

This will probably impact dropzones some, - we sell $50-60K each year in gift certificates and they all have a 1 year expiry. We generally honor them anyway just to be nice, but we still get calls from people with gift cert's that are literally 7-10 years old, wondering if they are still good.

This legislation now says that they are.

Any legal beagles out there that can do a better interpretation ?

Thanks
TK

[JohnRich 4]

So you're worried that you might actually have to honor every gift certificate that you sell, and provide the actual services for which you received money?

Do you provide your customers with refunds for expired gift certificates?

[diablopilot 2]

Not a legal beagle, but I guess that some of the risk we take selling gift certificates is that we could have a 100% return rate. I doubt your return rate will go up much because of this.

I wonder if printing the current value on the certificate could prevent those 7 to 10 year old ones from being used at face value. That way because of normal inflation you could add the difference as a surcharge.

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You're not as good as you think you are. Seriously.

[tkhayes 348]

I am not worried about having to 'honor' them, no, as I said in my post, which you apparently did not read, that we honor them almost always anyway.

Do you want to give a tandem to someone who bought the gift certificate in 1998 for $125 on sale during some special you had, and now you have to honor that in 2007 when the real cost is closer to $180?

There are always exceptions, this bill does not appear to address any of them.

I see their point on a cash card for example - cash is cash. We sell a certificate for a tandem jump, which could cost us $20 more next year if oil goes to $100/barrel.

we currently say that they are not refundable after 6 months and they expire in one year. I like to give them incentive to come out, not wait forever to use it.

So do we stop selling them or do we just sell the cash gift card now?

According to what I read today, 23 states have similar legislation.

TK

[tkhayes 348]

That's probably the route we will go - put a value on it of max. whatever so it looks like cash in case the price goes up.

Most of our do come back quickly, but I still see plenty from years ago that have never been redeemed

This also reflects on the airline industry I expect. I regularly have received a travel voucher that expired if I did not use it. Of course the bill does not mention 'travel vouchers'

TK

[kallend 2,148]

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I am not worried about having to 'honor' them, no, as I said in my post, which you apparently did not read, that we honor them almost always anyway.

Do you want to give a tandem to someone who bought the gift certificate in 1998 for $125 on sale during some special you had, and now you have to honor that in 2007 when the real cost is closer to $180?


TK

On the other hand.... you have had their money in your bank for 9 years, which has provided value to you.

...

The only sure way to survive a canopy collision is not to have one.

[Eule 0]

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Do you want to give a tandem to someone who bought the gift certificate in 1998 for $125 on sale during some special you had, and now you have to honor that in 2007 when the real cost is closer to $180?

On the other hand.... you have had their money in your bank for 9 years, which has provided value to you.

If you put the $125 somewhere where it would make a massive 4% a year, you'd only be out two bucks on that $180.

If you're really concerned, maybe a way out is to not call it a "gift certificate". Maybe a "jump ticket" or something similar. That way it might go under a different set of rules. On the other hand, you have to be careful selling "tickets", because then you might fall under the rules for commercial airlines.

Eule

PLF does not stand for Please Land on Face.

[Andy9o8 2]

It's a good law. If you've paid for something, you've paid for it. It's not like the money goes back into the purchaser's bank account upon the card's expiry. Gift cards or gift certificates that are purchased with real money yet have an expiration date are a form of legalized theft. These laws remedy that.

[Armour666 0]

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It's a good law. If you've paid for something, you've paid for it. It's not like the money goes back into the purchaser's bank account upon the card's expiry. Gift cards or gift certificates that are purchased with real money yet have an expiration date are a form of legalized theft. These laws remedy that.

I can see where Tk is coming from if it's a gift certificate for an product or service that gets hit with inflation that why the limit on time you get hit with a loss providing a service. Gift card witch has a dollar value is a whole other thing $20 gift card 10 years ago bought $20 of good back then should be able to buy $20 of good now !( of course the amount of goods you can get will not be the same due to inflation of items ect.) But as Tk has pointed out a tandem of AFF level 1 jump priced now day would not be the same 10 years form now. The cost of fuel , staff , equipment ect all goes up as time goes on if it’s a Tandems or AFF level one for X dollar amount and they use it 10 years from now why is it unfair for the person using it having to pay the difference ?

I can see where people get pissed off having a 200 gift certificate just become worthless but on the same side there has to be a fair balance to the business as well so they are not bearing the brunt of an abused system that harms them in the end. Has to be a two way street in my opinion.

SO this one time at band camp.....

"Of all the things I've lost I miss my mind the most."

[tkhayes 348]

yep, I have their money -

my original post was not for some vast concern that i have with the issue - it was just to inform people out there of the new bill.

I really do not care either way - we will alter our gift certificats to have a face value, and there will always be a few that never come back

[CSpenceFLY 1]

But you don't understand. Everything here has to be debated till it's a dead horse. There has to be a winner and a loser, a good guy and a bad guy. So don't even thing about walking away from what you started.

[tdog 0]

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Do you want to give a tandem to someone who bought the gift certificate in 1998 for $125 on sale during some special you had, and now you have to honor that in 2007 when the real cost is closer to $180?

Thanks for the post. I for one agree that every state should have the same rule...

If there is a concern by anyone that a $125 gift cert in 1997 is being used today for $180... There are a few solutions:

1) Sell the cert as a $, not service based, unit of measure. "$125 towards your first AFF or Tandem jump".

2) Put in the fine print that a "free tandem" cert was issued at a value of $125. If the price increases, the cert owner will be liable for the difference.

3) My favorite if I am a business owner.... DON'T WORRY, BE HAPPY... If someone comes in 10 years later, upsell the video "Hey, back in the dark ages when that was issued video sucked, but now we have some new stuff. You really should add a video package!"

I hate companies that issue fees for unused certs or have expiration dates. Most accountants would suggest that gift certs should be "booked" as "unearned revenue" as a liability on the balance sheet, with the opposing entry in the asset account of the bank in which the cash was deposited. You don't "earn the money" until you do the service, thus your profit and loss reports don't show an impact until service delivery... Basically this is to say, accountants would know what certs are "out there" and the worst case scenario if every one was redeemed.

Oh, someone earlier in the thread said 4% interest... Well, a good business model is more like 10%. If you are a business owner, and you put cash into the business, you should return 10% as either dividends (profit to take home) - or increased value of the company to be taken home at the time of sale...

A note payable would be more like 9-10% (my business has a secured line for 8% currently), meaning a business owner can make 2% margin at least on any loan they take. A gift cert is like a loan, with no interest. But say you had to pay that interest, this is what $125 is worth:

1997 $125.00
1998 $135.00
1999 $145.80
2000 $157.46
2001 $170.06
2002 $183.67
2003 $198.36
2004 $214.23
2005 $231.37
2006 $249.88
2007 $269.87

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Even at 4%, you win:

1997 $125.00
1998 $130.00
1999 $135.20
2000 $140.61
2001 $146.23
2002 $152.08
2003 $158.16
2004 $164.49
2005 $171.07
2006 $177.91
2007 $185.03

I think you have a win win on this one as a business owner, because the cost of money (8%) is less than inflation (2-3%) almost every time...

The only businesses that will suffer from offering a "free hamburger" at 1997 prices then have to redeem at 2007 prices, are businesses that have so much cash they have no loans, and they also have no place in their own business to reinvest the cash and earn returns, and the owners are stupid enough not to then take the excess cash out of the business and invest the cash in a mutual fund or stock market elsewhere....

[tkhayes 348]

I do not know of any dropzone that has so much excess cash that they take it out in mutual funds.

Capital gains, income tax on corporations etc is pretty high. You are not going to invest that $125 gift certificate because at the end of the year, you might pay 30-40% tax on that money sitting in the bank on your books as 'profit'.

At the end of th eyear, you are either going to pay yourself (individual tax is lower), or invest in some new equipment or whatever to 'burn up the money' at the end of th eyear so you do nto show a huge profit on the books.

If you are S corporation, it does not matter that much as it is just a line on your tax return, but if you are C corp., then the corporate profit AND the shareholder profits are taxed.

anyway, we beat this to death - and there is no point in it - we will be putting cash values on our certificates and NO expiry dates.

[kelpdiver 2]

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anyway, we beat this to death - and there is no point in it - we will be putting cash values on our certificates and NO expiry dates.

How about splitting the difference - make it valid for one standard tandem within 12 months of issue, thereafter a cash value of X.

Hitting the recipient with a $20 hike right after they get the certificate might spawn those same of angry feelings as a certain 800 service did.

[skyberdyber 0]

Interesting, tickets to theme parks are excluded. Guess Disney has quite the lobby in the state of FL huh?

Don't sell Gift Certificates any longer. Sell tickets and call them tickets. Treat it just like the airlines. Give them a time and date for advanced booking when they purchase. Have them sign a purchase agreement of terms and conditions, just like the airlines, and follow EXACTLY what an airline policy would be. In fact, you might copy it line for line.

#1 The law specifically states "gift certificate" or "Credit memo".

#2 You'd have good footing to stand on if you follow a precedent set by a large airline doing business in your state.

#3 Once they sign an agreement to those terms, they agree to them.

The paperwork will be a pain in the ass but I think a good attorney could hold it up in court. Otherwise the airlines would have to comply. And it's really not a stretch to convince a judge skydiving is similar to the airlines.
Lastly, there is an weaker argument that can be made that a DZ is similar to a theme park or entertainment complex but doesn't fit the specific defintion, 25 acres or 1 million visitors. The argument is that you are being unfairly excluded from this exception. I mean, I can't think of any good reason why Disney shouldn't have to comply with this if you do.
It all depends, do you lose more trying to fight it, or getting screwed on cashflow?

http://www.skydiveatlanta.com
http://www.musiccityskydiving.com

[tdog 0]

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You'd have good footing to stand on if you follow a precedent set by a large airline doing business in your state.

And who likes airlines and feels warm and cozy inside purchasing an airline ticket for a friend or family member for Christmas knowing there are so many rules... I saw someone who's grandmother died and the airline refused to budge on the ticket letting them leave a few hours early - with a doctor calling to say what happened... Yes, for $200 they would let them leave on the plane that had open seats... God, I hate airlines...

I think the wording "Never expires, as long as we are here, you are welcome to join us" would look much more inviting under the tree than "Expires in X days"... Add a "If you don't wanna jump, that is cool, come hang out for a few hours and meet our staff and customers... If you still don't want to jump after meeting us, we will refund your money."

Often the super strict cancellation policies, credit card surcharges, and other things that I have seen done - make customers feel obligated and uncomfortable... When we think of a certain audible altimeter company - almost everyone remembers someone saying how well they were treated by them when they got free service of some kind... That is the customer service that DZs should give...

(not to say the original poster to this thread doesn't, this is an abstract comment).

[CSpenceFLY 1]

Bottom line is if there is no expiration date and no elaborate wording, how many of these are going to come back? Very few. I think TK has the right idea. Put a $$ amount on it and if it comes back 10 yrs from now give them credit towards a jump or give them the money back. Hell they should be transferable too. I don't see a need to sit around and think up ways to keep the money if someone changes their mind about jumping.