Bill To Eliminate Gift Card Fee Suddenly Dies In House Subcommittee

Posted at 10:14 PM, Feb 21, 2018
and last updated 2018-02-21 23:26:38-05

Rep. Tim Rudd (R-Murfreesboro) filed a bill in the Tennessee legislature to get rid of fees on unused gift cards. Some of those fees can deduct $2 a month from a card if it's not used for a year or more.

Wednesday, Rudd called those fees "grossly unfair."

The bill to remove the fees originally seemed popular: in fact, more than half of the members in the Tennessee House of Representatives signed on as co-sponsors.

But Wednesday, the bill suddenly died in a five-member subcommittee, even before it could be debated.

The House Consumer and Human Resources Subcommittee killed the bill because a second member on the committee didn't agree to discuss it.

Some on the subcommittee said that result was a mistake of Rudd -- the bill's prime sponsor and a freshman lawmaker -- who didn't arrange for another member of the subcommittee to second the bill in advance.

"I was looking forward to having a little debate in subcommittee, so I was surprised when he did not have a second lined up, I did not see that coming,” said Rep. Clark Boyd (R-Lebanon).

But Rudd says he is skeptical of that reasoning.

“Yesterday, they were all for it,” Rudd said.  “Disappointing, extremely disappointing.”

Rudd says its possible that banking industry lobbyists may have gotten to the other lawmakers.

“It had come under -- in the last few days -- intense scrutiny and opposition from the banking industry and from the Visa representatives,” Rudd said.

But Rep. Susan Lynn (R-Mt. Juliet), who chairs the subcommittee, says Rudd didn't do enough homework.  She says he failed to give the subcommittee specific data on how much it costs banks to keep open gift card accounts that aren't being used.

“These cards do have costs behind them, for the companies that keep track of those very low balances of $250 or $200," Lynn said.  "We don't know what those figures are, though.  No data was supplied at all.”

During Rudd's brief synopsis of the bill in front of the subcommittee, he said the banking industries behind the cash gift cards "profit billions of dollars from these unused fees each year."  Lynn later told NewsChannel 5 that Rudd provided no way to verify that statistic.

A fiscal note that accompanied the bill says business revenue in Tennessee would have increased by more than $253 million per year, because of a separate provision in the bill that would have allowed businesses to charge up to a $5 activation fee per card, separate from the eliminated inactivity fees.

Whatever the reason it failed -- political or procedural -- Rudd says he and his bill will return in the next legislative session.