H 8264Rights & Warranties

Commercial Law - General Regulatory Provisions - Unfair Sales Practices

Retailers must hold money from gift certificate sales in a separate account until the certificate is redeemed by the customer.

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Introduced Mar 11, 2026Committee House Corporations

Plain-English Summary

This legislation mandates that any business selling gift certificates must place the money received from those sales into a separate, dedicated bank account. The business is prohibited from mixing these funds with their general operating cash until the customer actually redeems the gift certificate. Once the certificate is used, the business may transfer the corresponding amount into their regular business account. Gift certificates that are given away for free as part of a loyalty or rewards program are exempt from this requirement.

For younger readers

When a store sells a gift card, they usually put the money right into their cash register to pay bills. This new rule says they can't do that anymore. Instead, the store must put the money paid for a gift card into a special, separate bank account. The money has to stay there and cannot be touched until the person with the gift card comes back to buy something. Once the card is used, the store can move the money to their main account. Free gift cards given as prizes don't have to follow this rule.

Who & Where It Applies

Impacted groups

RetailersConsumersSmall Business OwnersBanks and Credit UnionsAccountants

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Protects consumers from losing the value of their purchases should a retailer file for bankruptcy, as the funds are segregated from the business's general operating capital.
Prevents businesses from engaging in the risky financial practice of spending unearned revenue before the service or product has actually been provided to the community member.
Increases corporate accountability and financial transparency by mandating strict accounting practices for funds that technically belong to the consumer until redemption.
Imposes a significant administrative and liquidity burden on small, local businesses that may rely on cash flow to pay workers and keep the lights on, potentially giving an advantage to large corporate chains.
May discourage small businesses from offering gift certificates altogether due to the banking complexities, limiting options for low-income consumers who rely on gift cards for budgeting.
Could lead to increased banking fees for small merchants forced to maintain multiple accounts, costs which may ultimately be passed down to the consumer.

For Conservatives

Enforces the concept of contract integrity by ensuring that the funds pledged for a future product are actually available when the consumer makes a claim.
Protects the property rights of the consumer by treating the gift certificate funds as a liability rather than immediate revenue for the business.
Encourages disciplined business management and prevents "Ponzi-like" reliance on future sales to cover current debts.
Represents a severe government intrusion into the private financial operations and cash flow management of independent businesses.
Stifles economic freedom by locking up capital that business owners could otherwise use to expand, invest, or manage daily operations.
Creates unnecessary red tape and regulatory compliance costs by forcing businesses to open and manage additional bank accounts for potentially negligible amounts of money.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 14 additions

SECTION 1. Chapter 6-13 of the General Laws entitled "Unfair Sales Practices" is hereby amended by adding thereto the following section: 6-13-12.2. Money received for gift certificates.

(a) Any money, payment, or other monetary consideration received by any person, firm or corporation who or that sells any gift certificate for any product or merchandise sold by the person, firm or corporation, hereinafter referred to as a “retailer,” shall place the funds or consideration received for the gift certificate in a separate account. Funds shall be held in this separate account until the gift certificate is used or redeemed. Upon redemption of the gift certificate, in whole or in part, the funds in the separate account may be transferred to the retailer’s business account or such other account as where the retailer keeps funds collected in the usual course of the retailer’s business, in an amount equal to the amount of the gift certificate which has been redeemed. Provided, a gift certificate that is distributed to a consumer pursuant to a rewards, loyalty, or promotional program without any money or other thing of value being given in exchange for the gift certificate by the consumer, shall be exempt from the provisions of this section.

(b) As used herein, the term “retailer” shall have the same meaning as defined in § 6-13- 12.

SECTION 2. This act shall take effect upon passage.