Judiciary committee hears bill to make gift-card tampering a criminal offense

The Committee on Judiciary opened a hearing on Senate Bill 84, which would add certain gift-card conduct to the criminal use of a financial card statute and take effect July 1 if adopted, Jason Thompson, the committee reviser, told members.

"The bill modifies the crime of criminal use of a financial card to include certain conduct involving gift cards," Thompson said, summarizing that the proposed changes would add acquiring or retaining possession of a gift card or gift-card redemption information without consent, and altering or tampering with a gift card. He said the bill does not change existing penalties and would be effective July 1 if enacted.

Why it matters: Proponents said retailers face growing fraud tied to gift cards that can leave consumers and businesses without recourse. William Wilk, senior director of government affairs for the Kansas Chamber of Commerce, told the committee retailers are asking for clearer criminal penalties and enforcement tools.

"Gift cards have been the most requested holiday item for 17 years in a row now and fraud and tampering with gift cards continues to grow nationwide," Wilk said, describing a common scheme in which fraudsters record card numbers from cards on store displays and then spend funds after the card is activated but before the purchaser can use it.

Wilk said the bill would "bring awareness to this issue along with providing actions of accountability for law enforcement against individuals who commit these crimes," and that a presentation from the Council of State Retail Associations on gift-card fraud was attached to his testimony.

Committee members asked about how widespread the problem is in Kansas and whether retailers have adopted measures such as locked displays. Wilk said the activity occurs at a range of retailers — from large chains to small businesses — and that retail members generally did not want a statutory mandate forcing all sellers to keep cards behind locked counters. He said national law-enforcement coordination, including a Department of Homeland Security task force referenced in his materials, is working on the issue and that he would provide Kansas-specific data to the committee when available.

The reviser noted the bill preserves current penalty ranges, which vary by the value of property or goods implicated and may range from misdemeanors to higher severity levels under existing law. The reviser also said the bill adds statutory definitions for terms such as "cardholder," "closed-loop gift card," "gift card redemption information," "gift card issuer," and "open-loop gift card."

The hearing included written-only proponent testimony from Renee Hadley of the KCK Chamber of Commerce and a written neutral submission from Jay Houston Bales (referenced as provided on the committee record). No formal vote was taken during the hearing; the committee closed the SB84 hearing and proceeded to consider other bills.

The committee record shows the reviser told members the bill had passed the Senate 39-0. The committee did not adopt any amendments on the floor during this hearing.