Law adds consumer protections
By Bruce Edwards
STAFF WRITER | June 17,2012
A bill signed into law last month gives added protections for consumers, ranging from gift certificates to payday loans.
The law (Act 136) increases the minimum expiration date on paid gift certificates from three years to five years — conforming state law with federal law.
The Vermont law was also tweaked to deal with Groupon-type gift cards — cards that have both a paid and an unpaid promotional value.
Only the paid value of such gift cards are subject to the five-year minimum expiration date. The expiration dates for both the paid and unpaid value of the card must be included on the front of the card.
The law allows a consumer to ask for a refund on the unused paid value of the card but not the promotional value.
Any fees associated with a gift certificate must be provided to the consumer along with a toll-free number and, if available, a website address.
Exempt from the expiration date provision are loyalty programs such as frequent flier programs.
“The statute looks at those loyalty award programs as different from gift certificate that you pay for,” said Jason Duquette-Hoffman, director of the state’s Consumer Assistance Program.
Certain items are already exempt from the law including prepaid calling cards and season passes to recreational activities.
The Vermont Retail Association supported changes.
“I think it’s much easier for businesses and much easier for consumers if the laws are consistent,” said Tasha Wallis, executive director of the Vermont Retail Association. “And I also think that it’s very important to have these consumer protections on gift certificates or prepaid gift cards.”
The law extends the protection on “unsolicited goods” to businesses, municipalities and nonprofit organizations.
Individual consumers who receive merchandise or services they haven’t ordered are not obligated to pay for or return the merchandise.
Duquette-Hoffman said businesses and nonprofits were being billed for merchandise or services that were never ordered.
“It became a significant burden to the accounting departments of these agencies just trying to fight off these invoices,” he said.
The law does require the return of merchandise, if the merchandise was sent in error, provided the sender notifies the consumer or business within 20 days, or before the item has been disposed of or used by the consumer. The sender is required to pay for the return shipping.
For low-income Vermonters who use natural gas, the law directs the Public Service Board to establish a discount program for natural gas customers whose incomes are no greater than 200 percent of the federal poverty level or who qualify for the Low Income Home Energy Assistance Program.
“Right now you have the fuel dealers doing a program and you have the electrics on the verge of doing a program,” said Sarah Hoffman, deputy commissioner Department of Public Service. “And this kind of rounds it out to the natural gas customers also who are low income.”
She added that the PSB will open an investigation to determine the best way to implement the program.
The state’s only natural gas company is Vermont Gas Systems, which primarily serves Chittenden County.
The statute also takes aim to protect consumers from unlicensed lenders, in particular payday lenders, who operate out-of-state and solicit business online.
The “Unlicensed Loan Transactions” provision targets unlicensed lenders and third parties, including payment processing companies.
Because of their onerous annual interest rates that can be as much as 300 percent to 400 percent, payday lenders do not meet Vermont’s lending standards.
Although not licensed to do business in the state, payday lenders continue to make payday loans to Vermont consumers, said Thomas Candon, deputy commissioner of the Department of Financial Regulation.
Candon said over the last year the state has received between 20 and 24 complaints against payday lenders. In some cases, individual complaints involve as many as eight payday lenders.
He said the law is designed to make it more difficult for payday lenders or any unlicensed lender from doing business in the state by choking off their ability to debit a customer’s banking account.
“We were thinking that if we could stop the transmitter of that electronic debit, a bank in another state, maybe we could get that bank from initiating the electronic debit and therefore discourage and shut down the payday lender,” Candon said.
Other consumer protections in the law include:
Older consumers — Before Jan. 15, 2013, the Attorney General’s Office, in collaboration with various state and private agencies, is required to submit to the House Committee on Commerce and Economic Development recommendations on ways to protect older Vermonters.
Portable electronic devices — The law requires that any insurance premium that covers the loss or damage be itemized on a consumer’s bill. If the coverage is included in the purchase or leased price of the device, that fact must be disclosed to the customer.
Fire protection — The law directs the Department of Public Safety to study the feasibility of mandating sprinkler systems in new residential housing. The study, in conjunction with home builders and insurance carriers, will look at whether insurance carriers should absorb the installation cost.