Attention Business Owners: NY Law Imposes Duty on Businesses that Sell Gift Cards

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  • Attention Business Owners: NY Law Imposes Duty on Businesses that Sell Gift Cards

A new law went into effect this summer that requires New York businesses that sell gifts cards and/or gift certificates to display a notice to warn consumers about gift card fraud. The notice must be located at or near where any gift card or gift certificate is displayed or sold and needs to caution buyers about prepaid card scams and what to do if they suspect they may be a victim of a scam.  Businesses can’t sell gift cards or gift certificates unless the notice is displayed to purchasers.

This amendment to New York’s General Business Law was introduced in 2021 in response to the rise of gift card fraud.  Scammers request payments via gift cards as the funds are nearly impossible to trace, and victims have virtually no way to recover what they’ve lost. According to the Federal Trade Commission, consumers lost $228.3 million in 2022 alone as a result of gift card scams.

An example of this type of fraud is a scammer posing as a relative and messaging you asking that you purchase them a gift card so they can pay for an immediate need, like a car repair. The scammer convinces his victim to purchase a gift card under the guise of being a relative in need who promises to pay them back. Once the consumer provides the scammer with the gift card’s number and pin, the scam has been successful. Unfortunately, victims find out too late that the scammer wasn’t really the person they claimed to be.

The purpose of the law is to warn consumers of the prevalence of gift card fraud and prevent consumers from losing their money to scammers. Hopefully, these notices will make potential victims think twice before purchasing a gift card. The New York Secretary of State Robert J. Rodriguez said it best:  “it’s more important than ever to educate consumers so they know that gift cards should only be used for gifts, not to make payments.”

This new law went into effect on June 20, 2023. 

It’s important that business owners comply with this law and display the required notice.

The attorneys at The Coppola Firm are here to help! Give us a call today to ensure your business is operating in compliance with the law.


Lisa Coppola

Written by Lisa Coppola

Founder of The Coppola Firm

Lisa A. Coppola, Esq. understands the challenges her clients face, whether they’re starting a new business, taking their existing operations in a new direction, or facing a claim or threat.

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