§ 402-A — Merchandise certificates and obligations therefor

§ 402A. Merchandise certificates and obligations therefor. 1. A\nretail seller may issue merchandise certificates to a retail buyer, to\nbe paid for in instalments and to be used solely in exchange for goods\nand services with a cash sale price in the face amount of such\ncertificates and not redeemable in cash, pursuant to a document executed\nby the parties as hereinafter provided, which document, notwithstanding\nthe definition of obligations contained in subdivision seven of section\nfour hundred one, shall constitute a retail instalment obligation for\nthe purpose of this article, shall contain the entire agreement of the\nparties, and shall be subject to all of the provisions of sections four\nhundred three to four hundred twelve, inclusive, except the provisions\nof the second sentence of section four hundred five.\n 2. On each issue of merchandise certificates, the document evidencing\nthe obligation therefor shall set forth a legend as provided in\nparagraph (a) of subdivision two of section four hundred two, a notice\nto the buyer as provided in paragraph (b) of subdivision two of section\nfour hundred two, the names of the seller and the buyer, the residence\nor place of business of the buyer as specified by the buyer, the face\namount of the merchandise certificates issued, and all items required to\nbe disclosed by the act of congress entitled "Truth in Lending Act" and\nthe regulations thereunder, as such act and regulations may from time to\ntime be amended.\n 3. A seller may, in such a document, contract for and, if so\ncontracted for charge, receive and collect a credit service charge at\nrates not exceeding those provided under section four hundred four of\nthis article. Such credit service charge shall be computed on the face\namount of merchandise certificates issued to the buyer, less\ndown-payment, if any.\n 4. The buyer shall have the right to return to the seller at any time\nall merchandise certificates which have not been exchanged for goods and\nservices, and the seller shall thereupon credit the buyer with the full\nface amount of such unused merchandise certificates returned and the\namount of the pro rata credit service charge thereon, which shall be\ncomputed as of the date of issuance of the merchandise certificates so\nreturned. Where the amount of the refund of such credit charge is less\nthan one dollar no refund need be made.\n 5. (a) Merchandise certificates issued under this section or the cover\nof the booklet in which they are bound, shall bear:\n (i) A legend in at least eight-point bold type stating that the buyer\nmay return unused merchandise certificates so purchased at any time and\nthat the seller will give the buyer credit for the full face amount of\nany certificates so returned and credit for the pro rata credit service\ncharge if the same is one dollar or more;\n (ii) A legend in at least eight point bold type reading substantially\nas follows: If you wish to purchase, with merchandise certificates a\nsingle item of goods or services of greater value than the merchandise\ncertificates you now hold, you may save credit service charge by\nreturning your unused merchandise certificates for credit and purchasing\nnew certificates; and\n (iii) In the event the statements required by subparagraphs (i) and\n(ii) hereof are set forth on the cover of a booklet in which the\nmerchandise certificates are bound, each certificate shall bear a\nnotice, "NOT GOOD IF DETACHED".\n (b) If a retail seller issues merchandise gift certificates to a\nretail buyer to be paid for in instalments (1) in good faith, and (2) in\nreliance upon a retail buyers statement that the buyer intends to\ntransfer it to another as a gift, then such certificate need not set\nforth the legends required by subparagraphs (i) and (ii) above; provided\nthe certificate shall bear the legend "GIFT CERTIFICATE" and the seller\nshall give the buyer at the time of issuance of such certificate a\nstatement, or facsimile of such certificate, which shall identify such\ncertificate, and shall contain the legend required by subparagraphs (i)\nand (ii) above.\n 6. Notwithstanding the provisions of subdivision three of section four\nhundred three of this article, the buyer shall have the right to return\nto the holder of a retail instalment obligation executed on or after\nOctober first, nineteen hundred sixty-two, for merchandise certificates,\nat any time all merchandise certificates which have not been exchanged\nfor goods and services, and the holder shall thereupon credit to the\nobligation to the extent of the amount owing by the buyer thereon the\nfull face amount of such unused merchandise certificates returned and\nthe amount of the pro rata credit service charge thereon, which shall be\ncomputed as of the date of issuance of the merchandise certificates so\nreturned. Where the amount of the refund of such credit service charge\nis less than one dollar no refund need be made.\n