It appears Michigan is joining the growing list of states that are placing restrictions on gift certificates in the name of consumer protection, without fully appreciating the ramifications to small business. (See Gift Cards and Gift Certificates Statutes and Recent Legislation for more information about various state laws).

It appears both houses in the State of Michigan have approved bills that would amend Michigan law to (1) limit expiration dates to five years or more, and (2) require the funds to escheat to the state. See the Senate version of the bills, Bill 387 (S-2) and Bill 388 (S-2), covering Michigan's Consumer Protection Act and Uniform Unclaimed Property Act, respectively.

I cannot find evidence that these bills have been signed into law or vetoed, so I suspect they are sitting on the Governor's desk. They are scheduled to take effect on April 1, 2008.

What I find truly astounding, is the fiscal analysis of these two bills. They read, in their entirety:

In short, "no fiscal impact." This being said from a state that had the nation's highest unemployment rate for much of 2007. They didn't even try to soften the language, by saying "should not have any fiscal impact." Sheesh.

Michigan needs jobs. It's residents are leaving in droves, with "the likely consequence of a moribund economy that has pushed thousands more people into poverty." It's great that Michigan cares about protecting its consumers, but when they pass laws like this, with absolutely no rigor in studying the financial impact of their legislation, one cannot help but reach the obvious conclusion that Michigan is going to continue experiencing a significant, long-term decline in its economic base and status.

I've said it before, and I'll say it again: It's easy to pick on the biggest companies in the US, such as Best Buy, Circuit City, Walmart, etc, when constructing gift certificate law. However, being able to sell, expire, recognize and keep the revenue from gift certificate sales are absolutely critical to many groups of small businesses. Their survival depends on it. It's small business that pays an inordinate amount of local taxes. It's small business that employs a large percentage of the population. It's small business that struggles to survive and keep the lights on, especially in the economically depressed State of Michigan.

6 Responses to “Michigan legislators: stupid is, as stupid does”

1. robert luu Says:
   March 5th, 2008 at 6:56 pm

   I checked that link to see the current laws in Washington. Thanks for the updates. I'm glad you guys keep track of these changes.

2. Sarah H. Says:
   March 6th, 2008 at 8:19 am

   So what are these businesses supposed to do? Stop selling gift certificates? Lie, and say the certificates were used when they were not? Have clients "prepay" without giving a certificate?

   This is not well thought out. Since the money goes to the state after the term is up, it also seems a way for the local government to take the money and use it.

   It is as ridiculous as it is scary. It is very scary.

3. Chacha Says:
   March 6th, 2008 at 10:30 am

   I am in total agreement with the previous comment. A law is only as good as there is someone to monitor it. Michigan is obviously on some sort of power trip. They will never be able to keep up w/ the paperwork.

   Yes, ridiculous, quite ridiculous.

4. Sandra Says:
   March 6th, 2008 at 12:33 pm

   Thanks for this insightful article Larry! It really sums up the state of things in Michigan, and perhaps the national political culture. It seems many legislators are "out of touch."

5. Sharon Says:
   March 7th, 2008 at 9:52 am

   The thought that a state would require funds to be turned over to them when a gift certificate goes unredeemed is very scary. I doubt the ill-gotten proceeds the state would generate would cover the cost of enforcing such a law.

   I agree — this would be a stupid law — among many stupid laws — for the governor to sign. Punishing "big business" is never done without hurting the rest of us far more.

6. Alan Says:
   March 8th, 2008 at 10:32 am

   Quite simply, I would refuse to do this. Just as I was ready to refuse to comply with the law that was talked about (never went through) that would have required our business to charge a state sales tax of our customers for massage therapy. Let the government (try to) shut down our business if they really want to expend the effort… I won't comply with laws that are not just, and clearly this is not a just law, at least not the second part.

   I can't imagine how this would pass though, honestly… No big business such as Best Buy, etc. is going to allow their gift certificate dollars to be usurped by the state…

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