SB 760 ¹ adds several requirements to Maryland’s Consumer Protection Act that implement new safeguards aimed at preventing gift card fraud.

A. Warning Language ‘At or Near’ the Point of Sale

The Maryland Division of Consumer Protection will publish a model notice, which merchants are encouraged to adopt. As of this writing, the model notice has not yet been published.

B. Gift Card Packaging Requirements

“DO NOT SELL OR PURCHASE IF PACKAGING HAS BEEN BROKEN OR INDICATES TAMPERING.”

While merchants can use language that is “substantially similar” (rather than identical) to the suggested warning, the Maryland Division of Consumer Protection recommends they adopt the language exactly as displayed to help avoid any potential dispute about the disclosure’s validity.

C. Training Requirement

Merchants offering closed loop gift cards must provide training to all employees whose duties regularly include selling such cards, including instruction on how to identify and respond to gift card fraud. The Maryland Division of Consumer Protection will publish the exact nature and content of this required instruction, but as of this writing, specific instructional requirements have not yet been published.

Risks and Penalties of Non-Compliance

Businesses should be wary of government enforcement efforts. Violating the new statute may constitute an unfair, abusive, or deceptive trade practice, which might result in penalties under the Maryland Consumer Protection Act – including restitution and injunctive relief – and the possibility of state attorneys’ fees and costs. (See, e.g., MD. CODE ANN., COM. LAW §§ 13-402, 13-046). Consumer class actions may also be brought alleging violation of the law.

Takeaways

Companies offering closed-loop gift cards for sale in Maryland should review their packaging and marketing materials to ensure conformity with the requirements outlined in the law. Such companies should also monitor publications from the Maryland Division of Consumer Protection for further detail regarding the model warning notice and instructional requirements for employees.

‘Open Loop’ Gift Cards

SB 760 includes additional requirements for the sale of “open loop” gift cards, which are redeemable with multiple, unaffiliated merchants operating within that payment card’s network. Any seller of such cards should review the law carefully to understand the separate requirements applicable to “open loop” cards.