Michigan Developments
Eric Rule,
Director of Governmental Affairs

California-style gift-card legislation expected
Sen. Gerry Van Woerkom (R-Muskegon) is set to introduce legislation regulating customer gift cards and gift certificates in ways similar to changes recently enacted in California.

Senator Van Woerkom’s staff sought MRA’s input because of the Association’s interest and leadership in the bankcard and gift card field. Fortunately, Sen. Van Woerkom has been an ally in the past and should be more open to retail concerns on this issue.

After reviewing a copy of the draft bill, MRA sees several issues of concern. The bill contains provisions that would prohibit an expiration date and a service fee, including a fee for dormancy of the card.

Further, it would require that a retailer redeem any gift certificate sold after January 1, 1997, in cash for its cash value or replace it with a new gift certificate at no cost to the purchaser or holder.

As defined in the legislation, a “gift certificate” includes a gift card, unless the gift card is usable with multiple retailers and an expiration date, if any, is printed on the card. Multiple sellers do not include a group of sellers who are all affiliates of each other.

MRA will meet with the senator to discuss concerns with the legislation. Members who would like to have input on this issue are urged to call MRA with their concerns. A copy of the draft can be obtained via fax by calling Kathleen Wilson at 800.366.3699.

Bottle bill task force issues recommendations
The Senate Beverage Container and Recycling Task Force issued its final report addressing the state’s recycling deficiencies.

The report did not call for an expansion of the state’s beverage container law, but instead focused its efforts on increasing comprehensive recycling programs in the state. It also called for a new $3-per-ton landfill tipping fee to fund local recycling programs.

MRA has been a member of the Executive Committee of the Michigan Recycling Partnership. The Michigan Recycling Partnership worked hard to educate the legislature that a move to simply collect more beverage containers was shortsighted and did not focus on Michigan’s real problems of overall municipal solid waste recycling.

The task force recommended the following items among others:
• Put a comprehensive statewide recycling plan into statute and have the legislature revisit it every five years;
• Establish a Recycling Advisory Council consisting of members of the recycling industry, the business and environmental communities and local units of government;
• Establish tax credits for businesses that invest in floor space for redeeming containers or equipment necessary to process and store containers;
• Consider the use of “advance recycling fees” to help ensure proper management of certain items that contain toxic materials such as various forms of electronic waste.

According to Task Force Chair Sen. Cameron Brown (R-Sturgis), as many as 40 bills will soon be drafted to address the task force’s recommendation.

Income tax rollback freeze considered
With the recent Revenue Estimating Conference showing that the state is already nearly $1 billion in the hole for the fiscal year that began October 1, some lawmakers have been advocating a freeze in the income tax rate rollback. The rate is scheduled to drop by another tenth of a percent to 3.9 percent on January 1, 2004.

Business groups, including MRA, are nearly unanimous in their opposition to a freeze, noting that such an option would encourage further spending while netting the state less than $300 million toward filling the hole in the state budget.

Identity-theft legislation expected soon
Several victims of identity theft testified before the Senate Judiciary Committee, explaining their struggles to clear their name and credit. After hearing several hours of testimony, committee members vowed to try to help resolve some of the problems associated with identity theft.

One of the legislative fixes being considered—proposed by Senator Mike Bishop (R-Rochester Hills)—would change the jurisdiction in charge of investigating the crime. Bishop’s proposal would base that jurisdiction on where the victim lives, rather than where the crime is perpetrated, as current law stipulates.

MRA is very concerned about identity theft and will be offering insight on how retailers can be of assistance while not being overly burdened in their day-to-day operations.

Update from Washington
James Goldberg,
MRA Washington Counsel

Senate adopts anti-spam legislation
By a 97-0 vote, the Senate has passed legislation (the CAN-SPAM Act) designed to end those pesky e-mails.

The bill would require senders of unsolicited commercial e-mail to include a valid return e-mail address so that consumers can advise them to stop sending future messages, notification that a message is an advertisement and the sender’s valid postal address.

While the measure still must be approved by the House, that body’s leadership has bypassed the normal committee referral and placed the bill on the House floor calendar, meaning that it can be called up for a vote at any time.

While the retail industry and others generally support the measure, the Senate-passed bill includes a controversial amendment offered by Sen. Charles E. Schumer (D-NY) to study the establishment of a national “do not e-mail” directory, similar to the “do not call” list recently implemented by the Federal Trade Commission. Schumer’s amendment authorizes creation of a plan for such a list within six months and implementation of it by the FTC within nine months. The agency has argued that it may not be feasible to enforce such a system.

While retail and other business groups generally support the bill, they oppose Schumer’s amendment. MRA’s Washington Office is urging House leadership to adopt an amendment deleting the “do not e-mail” provision.

"Do not call" list up and running
Despite some fits and starts at its inception, the Federal Trade Commission’s “do not call” list is up and running, and the agency has already received more than 10,000 complaints about unsolicited telephone calls that may violate its provisions.

Implementation of the national list took effect October 1, after a federal appeals court refused to issue an injunction blocking enforcement of the list while a lawsuit challenging its constitutionality was pending.

The national list is only applicable to residential telephone numbers and does not prohibit MRA members from making unsolicited telephone sales calls to individuals with whom they have had some business relationship—that is, a sale—within the last 18 months.

Accounting rule targets coupons
The Financial Accounting Standards Board (FASB) has proposed a new rule on how retailers account for coupons and other promotions. Most retailers currently count these programs as revenue, but the proposed rule would require that most promotions be counted as a reduction in the cost of sales.

On paper, that would make it look like sales had declined.

While the FASB rules have the greatest impact with public companies, whose financial statements are publicly available, they could also impact the statements of privately held companies, since many accountants follow FASB rules when they prepare the annual financial statements for private companies.

That, in turn, could impact the way lenders view the statements.

Visa considers new security program
MRA’s Washington Office was represented at a recent meeting between large retailers and Visa concerning the card issuer’s proposed new program designed to safeguard customer information.

Although initially targeted at the largest 100 e-commerce retailers, the Cardholder Information Security Program (CISP) could eventually have ramifications throughout the retail industry.

As currently envisioned, the program would require retailers to certify that their customer data programs met as yet unspecified security standards, thus making the data difficult, if not impossible, to be “hacked.”

Retailers who do not or will not provide the required certification could have fraudulent credit card transactions charged back to them rather than being absorbed by the bank issuing the credit card.

The retailers in attendance at the meeting strongly objected to any mandatory program, any program that did not include other major card issuers (e.g., MasterCard, AmEx and Discover) and any program that made retailers liable for transactions that were authorized by the card issuer at point-of-sale which later turned out to be fraudulent.

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