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AN ACT relating to gift cards. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 434.560 is amended to read as follows: 3
As used in KRS 434.550 to 434.730, unless the context otherwise requires: 4
(1) "Automated banking device" means any machine which when properly activated by 5
a credit card, debit card or personal identification code will perform any of the 6
following services: 7
(a) Dispense money as a debit to the cardholder's savings or checking account; or 8
(b) Print the cardholder's savings or checking account balances on a statement; or 9
(c) Transfer funds between a cardholder's savings and checking account; or 10
(d) Accept payments on a cardholder's loan; or 11
(e) Dispense cash advances on an open end credit or a revolving charge 12
agreement; or 13
(f) Accept deposits to a customer's savings or checking account; or 14
(g) Receive inquiries of verification of checks and dispense information which 15
verifies that funds are available to cover said checks; or 16
(h) Cause money to be transferred electronically from a cardholder's account to 17
an account held by any business, firm, retail merchant, corporation, or any 18
other organization; 19
(2) "Cardholder" means: 20
(a) For a credit or debit card, the person or organization named on the face of a 21
credit or debit card to whom or for whose benefit the credit or debit card is 22
issued by an issuer; or 23
(b) For a gift card, any person or organization to whom a physical or virtual 24
gift card is issued through a purchase, or who receives a gift card from a 25
willing party; 26
(3) "Credit card" means any instrument or device, whether known as a credit card, 27 UNOFFICIAL COPY 25 RS BR 1718
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credit plate, credit number or by any other name, issued by an issuer for the use of 1
the cardholder in obtaining money, goods, services or anything else of value on 2
credit; 3
(4) "Debit card" means any instrument or device, known by any name, issued with or 4
without fee by an issuer for the use of the cardholder in obtaining money, goods, 5
services and anything else of value, payment of which is made against funds 6
previously deposited by cardholder; 7
(5) "E.F.T. system" means an electronic funds transfer system whereby funds are 8
transferred electronically from a cardholder's account to any other account; 9
(6) "Expired credit card" means a credit card which is no longer valid because the term 10
shown on it has expired; 11
(7) "Expired debit card" means a debit card which is no longer valid because the term 12
shown on it has expired; 13
(8) "Gift card" means a card, code, or device that: 14
(a) Is issued on a prepaid basis primarily for personal, family, or household 15
purposes in a specified amount, regardless of whether that amount may be 16
increased or reloaded in exchange for payment; and 17
(b) May be redeemable upon presentation by a cardholder at a single merchant 18
or group of merchants, or at multiple unaffiliated merchants within a 19
payment card network; 20
(9) "Gift card redemption information" means information unique to each gift card 21
which allows the cardholder to access, transfer, or spend the funds on that gift 22
card; 23
(10) "Issuer" means the business organization or financial institution which issues a 24
credit, [or ]debit, or gift card or its duly authorized agent; 25
(11)[(9)] "Merchant" means an owner or operator of any retail mercantile establishment 26
or any agent, employee, lessee, consignee, officer, director, franchisee, or 27 UNOFFICIAL COPY 25 RS BR 1718
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independent contractor of such owner or operator. "Merchant" also means: 1
(a) A person who receives from an authorized user of a payment card, or 2
someone the person believes to be an authorized user, a payment card or 3
information from a payment card, or what the person believes to be a payment 4
card or information from a payment card, as the instrument for obtaining, 5
purchasing, or receiving goods, services, money, or anything else of value 6
from the person; or 7
(b) A person engaged in the business of selling gift cards to consumers; 8
(12)[(10)] "Participating party" means a business organization or financial institution, or 9
any duly authorized agent of such business organization or financial institution, 10
which is obligated by contract to acquire from a person, business organization or 11
financial institution providing money, goods, services or anything else of value, a 12
sales slip, sales draft or other instrument evidencing a credit, [or ]debit, or gift card 13
transaction and from whom the issuer is obligated by contract to acquire or 14
participate in such sales slip, sales draft or other instrument; 15
(13)[(11)] "Payment card" means a credit card, charge card, debit card, or any other card 16
that is issued to an authorized card user and that allows the user to obtain, purchase, 17
or receive goods, services, money, or anything else of value from a merchant; 18
(14)[(12)] "Presentation or presents" as used herein shall be construed to define those 19
actions taken by a cardholder or any person to introduce a credit or debit card into 20
an automated banking device or merely displaying or showing a credit or debit card 21
to the issuer, a person or organization providing money, goods, services, or 22
anything else of value, or any other entity with intent to defraud; 23
(15)[(13)] "Receives" or "receiving" means acquiring possession or control of a credit or 24
debit card; 25
(16)[(14)] "Reencoder" means an electronic device that places encoded information from 26
the magnetic strip or stripe of a payment card onto the magnetic strip or stripe of a 27 UNOFFICIAL COPY 25 RS BR 1718
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different payment card; 1
(17)[(15)] "Revoked credit card" means a credit card which is no longer valid because 2
permission to use it has been suspended or terminated by the issuer; 3
(18)[(16)] "Revoked debit card" means a debit card which is no longer valid because 4
permission to use it has been suspended or terminated by the issuer; and 5
(19)[(17)] "Scanning device" means a scanner, reader, or any other electronic device that 6
is used to access, read, scan, obtain, memorize, or store, temporarily or 7
permanently, information encoded on the magnetic strip or stripe of a payment card. 8
SECTION 2. A NEW SECTION OF KRS CHAPTER 434.550 TO 434.730 IS 9
CREATED TO READ AS FOLLOWS: 10
(1) A person who, with intent to defraud a cardholder, a person or organization 11
providing money, goods, services, or anything else of value, or any other person, 12
tampers with a gift card or its packaging, or uses or possesses a gift card with 13
knowledge that the gift card has been tampered with, is guilty of a Class D felony. 14
(2) A person who possesses two (2) or more gift cards which have been tampered 15
with is presumed to possess the same with knowledge that they have been 16
tampered with and with the intent to defraud. 17
Section 3. KRS 434.580 is amended to read as follows: 18
(1) (a) A person who takes a credit, [or ]debit, or gift card from the person, 19
possession, custody or control of another without the consent of the 20
cardholder, [or of ]the issuer, or, for a gift card, the merchant, or who, with 21
knowledge that it has been so taken, receives the credit, [or ]debit, or gift card 22
with intent to use it or to sell it or to transfer it to a person other than the 23
issuer, [or ]the cardholder, or, for a gift card, the merchant, is guilty of a 24
misdemeanor and is subject to the penalties set forth in subsection (1) of KRS 25
434.730. 26
(b) Taking a credit, [or ]debit, or gift card without consent includes obtaining it 27 UNOFFICIAL COPY 25 RS BR 1718
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by conduct defined or known as statutory larceny, common-law larceny by 1
trespassory taking, common-law larceny by trick, embezzlement, or obtaining 2
property by false pretenses, false promise or extortion. 3
(2) A person who has in his or her possession or under his or her control two (2) or 4
more credit, [or ]debit, or gift cards which have been taken or obtained in violation 5
of subsection (1) of this section is presumed to know that the credit, [or ]debit, or 6
gift cards have been so taken or obtained. 7
Section 4. KRS 434.650 is amended to read as follows: 8
(1) (a) A person who, with intent to defraud the issuer, a participating party, a 9
person[,] or organization providing money, goods, services, or anything else 10
of value, or any other person: 11
1. Uses for the purpose of obtaining money, goods, services, or anything 12
else of value a credit or debit card obtained or retained in violation of 13
KRS 434.570 to 434.650, or any of such sections, or a credit or debit 14
card which he or she knows is forged, expired, or revoked; 15
2. Obtains money, goods, services, or anything else of value by 16
representing without consent of the cardholder that he or she is the 17
holder of a specified card or by representing that he or she is the holder 18
of a card and such card has not in fact been issued; 19
3. Uses a credit or debit card obtained or retained in violation of KRS 20
434.570 to 434.650, or any of such sections, or a credit or debit card 21
which he or she knows is forged, expired, or revoked, as authority or 22
identification to cash or attempts to cash or otherwise negotiate or 23
transfer a check or other order for payment of money, whether or not 24
negotiable, if said negotiation or transfer or attempt to negotiate or 25
transfer would constitute a crime under KRS 514.040 or 516.030;[ or] 26
4. Deposits into his or her account or any account, via an automated 27 UNOFFICIAL COPY 25 RS BR 1718
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banking device, a false, fictitious, forged, altered, or counterfeit check, 1
draft, money order, or any other such document not his or her lawful or 2
legal property; or 3
5. Obtains a gift card or gift card redemption information from a 4
cardholder, issuer, or merchant by means of false or fraudulent 5
pretenses, representations, or promises; 6
is guilty as provided in paragraph (b) of this subsection. 7
(b) The penalty for violating paragraph (a) of this subsection is a Class B 8
misdemeanor unless: 9
1. The value of all money, goods, services, or other things of value 10
obtained in violation of this section over a six (6) month period is five 11
hundred dollars ($500) or more but is less than one thousand dollars 12
($1,000), in which case it is a Class A misdemeanor; 13
2. The value of all money, goods, services, or other things of value 14
obtained in violation of this section over a six (6) month period is one 15
thousand dollars ($1,000) or more but is less than ten thousand dollars 16
($10,000), in which case it is a Class D felony; 17
3. The person has three (3) or more convictions under subparagraph 1. of 18
this paragraph within the last five (5) years, in which case it is a Class D 19
felony. The five (5) year period shall be measured from the dates on 20
which the offenses occurred for which the judgments of conviction were 21
entered; or 22
4. The value of all money, goods, services, or other things of value 23
obtained in violation of this section over a six (6) month period is ten 24
thousand dollars ($10,000) or more, in which case it is a Class C felony. 25
(2) A person who receives money, goods, services, or anything else of value as a result 26
of a false, fictitious, forged, altered, or counterfeit check, draft, money order, or any 27 UNOFFICIAL COPY 25 RS BR 1718
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other such document having been deposited into an account via an automated 1
banking device, knowing at the time of receipt of the money, goods, services, or 2
item of value that the document so deposited was false, fictitious, forged, altered, or 3
counterfeit or that the above described deposited item was not his lawful or legal 4
property, violates this subsection and is subject to the penalties set forth in 5
subsection (1) of this section. 6
(3) Knowledge of revocation shall be presumed to have been received by a cardholder 7
four (4) days after it has been mailed to him or her at the address set forth on the 8
credit or debit card or at his or her last known address by registered or certified 9
mail, return receipt requested, and, if the address is more than five hundred (500) 10
miles from the place of mailing, by air mail. If the address is located outside the 11
United States, Puerto Rico, the Virgin Islands, the Canal Zone, and Canada, notice 12
shall be presumed to have been received ten (10) days after mailing by registered or 13
certified mail. 14