2012 Legislative Agenda

Retail Council position

Support legislation that would clarify and strengthen New York’s current laws combating organized retail crime (ORC). The absence of clearly defined and tough penalties against ORC has created opportunities for highly-skilled criminals to steal tens of millions annually from New York merchants.

The Retail Council also supports legislation that would increase penalties for individuals who manufacture and/or sell counterfeit merchandise to consumers throughout New York State. Such counterfeit goods not only affect the bottom line of honest merchants, certain products also pose a serious health threat to the consumers who use them.

Legislative action

The Senate and Assembly introduced legislation endorsed by the Retail Council that would formally define in statute organized retail crime and the leaders of ORC rings. The bill would also establish penalties for possession of ‘booster bags,’ emergency exit theft, use of fraudulent UPC labels and includes other important provisions necessary to successfully prosecute individuals participating in this costly form of criminal activity. S.529 (Fuschillo)/ A.8561 (Gibson) remain in their respective committees of origin.

The Legislature in 2011 also introduced legislation that would further curtail instances of ORC, if enacted – all are supported by the Retail Council. Each measure passed the Senate during the 2011 Legislative Session and the bills remain under consideration in the Assembly Codes Committee. They include:

ANTI-SECURITY MECHANISM: Would establish a penalty for possession of a device manufactured to offset or bypass retail security systems, with the intent to steal merchandise.  S.527 (Fuschillo)/ A.8562 (Gibson)

ITINERANT MERCHANTS: Would clarify existing definitions of items prohibited from sale by itinerant merchants.  S.525 (Fuschillo)/ A.5345 (Schimminger)

At a glance

• Organized retail crime comprises a wide spectrum of high-volume and highly organized theft rings that cost New York retailers millions of dollars annually and, more importantly, compromise the health and safety of unsuspecting New York State consumers.
• ORC is not shoplifting – ORC runs the gamut from return fraud, credit card scams, and the sale of counterfeit merchandise to well-organized networks of trained thieves, boosters, and fences ready to steal and move product.
• Organized retail crime takes an enormous bite out of a merchant’s bottom line, with the cost topping some $30 billion nationally each year according to industry estimates.  Honest shoppers ultimately pay the price in higher costs at the cash register.
• Retailers are being attacked by ORC rings and well-trained, highly-skilled, and professional boosters and thieves who are supported by their criminal fences.
• Criminal fences either sell the goods to a higher-level fence or sell the goods themselves in a business-like setting, including on-line portals that ensnare unsuspecting, honest consumers.
• Many ORC rings focus on theft of infant formula, over-the-counter medications, shaving products, film and data-recording media, batteries, and other fairly expensive non-foods.  These products may be sold in stores that the fences own – or in itinerant vendor locations where the quality, safety, and effectiveness of the products can be detrimentally compromised.  Again, the consumer pays the ultimate price – either through the purchase of stolen and unusable (and dangerous) merchandise, and/or through the higher cost at the cash register of the merchant from whom so many goods have been stolen.
• Because retail plays such an important role in New York’s economy, New York must respond by passing laws that protect merchants and consumers from organized retail crime.  The Retail Council of New York State will continue to educate lawmakers, prosecutors and law enforcement about this criminal activity.

Retail Council position

Oppose legislation seeking to ban or restrict reasonable business terms and conditions to gift cards and/or gift certificates; oppose legislation seeking to ban expiration dates on such instruments; similarly oppose legislation that would require retailers to fund an escrow account in an amount equal to gift card sales; strongly oppose legislation that would require escheat to New York State of unused portions of gift card balances – even on gift cards that carry no expiration date.

Legislative action

The Retail Council opposes legislation that would unduly restrict retailers’ ability to sell gift cards. In 2012, those bills include: A.1057 (Ortiz) and A.3525 (Reilly). The bills remain in their respective committees of origin.

The Retail Council has supported legislation in past sessions that would prohibit the sale of gift cards containing expiration dates and would remove gift cards from the provisions of New York’s Abandoned Property Law, among other provisions. That legislation was held in the Senate Rules and Assembly Consumer Affairs Committees and has not yet been introduced in 2012.

At a glance

• Because the preponderance of retailer-issued gift cards carry neither fees nor expiration dates, the Retail Council supports New York’s statutes that require certain disclosures on any gift cards carrying terms and conditions (Chapters 170, 171 and 507, Laws of 2004).
• Legislation or ill-conceived budget proposals that attempt to define unclaimed gift cards as abandoned property – regardless of expiration date – will be met with staunch opposition from retailers, most notably those that offer gift cards without expiration date restrictions, fees or terms.  Consumers, too, would be misinformed when purchasing an ‘unexpired gift card’ if unclaimed balances were forced to be re-directed inappropriately to the New York State treasury.
• Efforts to limit or prohibit outright such terms and conditions are based on the flawed assumption that ‘a gift card is the same as cash.’ When a consumer purchases a gift card, his or her cash is converted into a proprietary product for use in a specific location(s) in exchange for merchandise or service. Retailers and others offering gift cards are therefore prohibited from treating the product as if it were ‘the same as cash’ and must abide by certain bookkeeping standards and requirements.  As a result, they may apply terms and conditions that should be appropriately disclosed to customers at the point-of-purchase.
• Behind the popular ease and convenience of the cards for consumers is a complicated and expensive web of technology and bookkeeping requirements which many retailers have absorbed entirely.  Others have chosen to apply certain terms and conditions to the cards which they deem necessary within their own business models.  Not all merchants apply such terms and conditions, however. Choices available to consumers today free the shopper from being forced to buy a gift card from a specific merchant.
• Electronic gift cards have become tremendously popular with consumers in retail stores, restaurants, shopping malls, and other service providers. A survey conducted by the National Retail Federation revealed that over 80 percent of consumers planned on purchasing a gift card during the 2011 holiday shopping season – a figure that typically increases annually as a growing number of consumers rely on the freedom and choice that accompanies a gift card product.
• Theft and fraud – including the Internet-based auctions of illegally purloined and activated gift cards – add new layers of costs for merchants and honest consumers alike.
• Consumers will vote with their wallets. If they are unhappy with a merchant’s gift card policy, they will shop elsewhere.

Retail Council position

The Retail Council strongly opposes any point-of-sale tax on plastic shopping bags used by consumers and equally opposes efforts to prohibit the distribution of plastic shopping bags at the point-of-sale. The Retail Council actively supported enactment of the state’s law requiring retailers and others to accept plastic shopping bags for recycling (“Plastic Bag Reduction, Reuse, and Recycling Act,” Chapter 641, Laws of 2008).

Legislative action

A number of proposals considered by the Legislature would regulate the use of plastic bags in the retail marketplace, including:

• A.1142 (Ortiz), which would impose a 15 cent tax on plastic shopping bags.
• A.6272 (Englebright)/ S.4277 (Serrano), which would impose a one-cent tax on plastic bags distributed at the point-of-sale. The bill would also require retailers to itemize the number of bags and associated fees on a sales receipt.
• A.5107 (Kellner), which would establish up to a 25 cent tax on plastic carryout bags. The legislation would also require covered retailers to accept reusable bags for return and would authorize retailers to charge a deposit for reusable bags.

The Retail Council opposes the referenced bills, which all remain in their respective committees of origin.

At a glance

• The Retail Council over the years has worked diligently with the Legislature, our member stores and the environmental community toward legislation that would require certain stores to implement plastic bag recycling programs throughout all 62 counties in New York State. Because of this constructive dialogue, Chapter 641 of the Laws of 2008 strikes an appropriate balance between sound environmental policy and workable mandates for the regulated industry. Attempts to amend this carefully crafted law — specifically to exempt New York City from its provisions and open the floodgates for local officials to implement separate, competing and conflicting laws — would guarantee different reporting requirements and enforcement standards across multiple jurisdictions, adding a new layer of cost to the retail industry that would be passed along to consumers.
• A point-of-sale tax on plastic shopping bags would neither encourage consumers to recycle nor reuse plastic bags; it would serve simply as a roadblock that many consumers would bypass by using paper alternatives. Urban shoppers, especially, would be affected negatively by this regressive tax as they use plastic bags for the convenience and functionality that durable handles and weather-resistant designs offer. Important to note, too, are the fundamental and costly operational difficulties that retailers would experience when attempting to add a specific line item in point-of-sale systems to account for a tax on plastic bags.
• Attempts to limit and/or prohibit the use of plastic shopping bags will do nothing to reduce the carbon footprint of retailers or their customers – paper bag alternatives are more harmful to the environment in a number of ways. Paper shopping bags not only take 40 percent more energy to produce than plastic bags, but paper bags also generate 80 percent more waste than plastic bags, according to the Progressive Bag Alliance.
• Consumer education, rather than unrealistic mandates on businesses, is a key component to recycling efforts. The Retail Council will continue to work constructively with lawmakers throughout 2012 to address environmental concerns related to shopping bags and other issues of importance to our members and their customers.

Retail Council position

New York and states across the nation forgo millions of dollars in sales tax revenue in the absence of a federal solution to create sales tax parity between Internet sellers and brick and mortar stores. The Retail Council continues to advocate for our longstanding position that online merchants should not be given an unfair competitive advantage over stores with a physical presence in local communities based on sales tax policy alone.

The United States House of Representatives and Senate introduced legislation in 2011 that would authorize states to collect sales tax on remote purchases, while allowing each state to maintain and enforce its current and unique sales tax laws. This approach is strongly supported by the Retail Council of New York State.

Legislative action

New York’s law enacted in 2008 requires merchants based outside of the state that affiliate with and compensate in-state entities to promote their web-based business to collect and remit New York State sales and use tax on purchases made by and shipped to New York State residents.

Federal legislation introduced would allow states to collect sales and use tax on Internet purchases and would complement New York’s existing law by expanding the scope of remote sellers that would be required to collect such tax. H.R. 3179 (Marketplace Equity Act of 2011) and S.1832 (Marketplace Fairness Act) are actively supported by the Retail Council of New York State and we urge the New York State Legislature to push for Congressional action.

At a glance

• The Retail Council of New York State strongly supports a fair, consistent and sustainable tax treatment of consumer goods sold through brick-and-mortar stores and Internet venues. In 2012, New York State will lose an estimated $865 million in sales tax revenue from e-commerce sales, according to a study conducted by the University of Tennessee. This underscores our strong support for the ‘Marketplace Equity Act of 2011’ and the ‘Marketplace Fairness Act.’
• New York’s leadership in enacting a “click-through nexus” law in 2008 – most recently upheld by the courts in November 2010 — is now used as a model in a number of other states, where retailers and lawmakers alike recognize the opportunity to collect rightfully sales taxes due and owing in those states.
• The Retail Council participated in a June 2010 roundtable hosted by the Senate Select Committee on Budget and Tax Reform addressing “New York State’s Fiscal Stability through a More Rational and Streamlined Sales Tax System.” The Select Committee concluded that “New York trails other states in regard to simplifying the tax and adjusting to the consumer consumption shift from goods to services.”
• Among the conclusions of the Select Committee: “Explore ways to simplify New York’s sales tax system, with an eye toward conforming to the rules and bylaws of the Streamlined Sales and Use Tax Agreement, if not pursuing full Streamlined membership.”

Retail Council position

The Retail Council of New York State opposes strenuously any legislation dictating mandatory restrictions on the planning and advertising of special sales events. Such legislation would impose an unprecedented level of stifling bureaucracy that would prohibit retailers in New York State from offering special sales during the ‘holiday shopping season’ – that time of year when consumers expect, want, need, and demand special sales events.

Legislative action

Legislation introduced in 2011 would prohibit retailers from advertising ‘doorbuster’ sales unless such events are registered with an appropriate local agency and would also require retailers to obtain a separate license for such event 60 days before each separate event occurs. The bill would further require significant disclosures outlining crowd control, the nature of the sale, names of store personnel, and security training. S.3021 (Huntley)/ A.1868 (Jaffee) remain in their respective committees of origin.

At a glance

• The retail industry acknowledges the gravity of the unfortunate event leading to the introduction of this and similar measures in which a retail employee was killed when over-exuberant shoppers, stimulated by pre-holiday media coverage, tested the security and safety policies of all retailers.
• Retail’s demonstrable commitment to shopper and employee safety can best be underscored by the fact that thousands of similar sale events took place on that same day without incident.
• Merchants immediately reviewed even the most thoroughly-vetted store safety procedures, with redoubled safety and security measures established, implemented, and enforced.
• Among the new and modified safety and security procedures in place offer longer store hours, claim tickets issued for certain items to customers waiting in line, specific areas to guide customers to the door in an orderly fashion, and relocation of shopping carts and special sale merchandise to facilitate the flow of customers and employees inside store locations.
• These and other highly successful safety and security strategies worked as intended during the holiday rush in 2010 and 2011, with only scattered reports of minor incident – proof positive that retailers’ commitment to safety is strong and viable.
• Homogenized criteria for “crowd control” drafted and imposed by differing governmental entities throughout the state would vary from jurisdiction to jurisdiction. No store would be able to advertise a sale during the time of year when customers most demand special sales – with store managers often given the authority to conduct special sales on short notice and under certain conditions of safety and security.
• No amount of rule imposed by the government could regulate the behavior of any one person in line for a sale, movie premier, sports event, or concert – nor could government guarantee the safety of any one customer or store employee.
• The New York City Department of Consumer Affairs opposed similar legislation introduced in the New York City Council in 2009, noting that they had no expertise to “effectively evaluate whether any proposed plan would be adequate to ensure the safety of shoppers … thus providing only illusory and misleading protection to the public.” The Department testified thus: “ … we do not see the bill … as a solution, and in fact worry that it might impede the current system of civil and criminal regulation designed to press merchants to safeguard shoppers on their premises under existing law.”

Retail Council position

Support legislation that would require credit card processors and issuing banks to disclose conspicuously all fees charged to retailers in conjunction with credit or debit transactions at the point of sale; support legislation that would provide relief to retailers and consumers needing protection from the hidden fees, charges, and contractual demands of credit card companies.

Legislative action

The Senate and Assembly had considered legislation in 2010 that would require credit card processors to furnish merchants with credit and debit card rules and fee schedules [A.4994 (Brodsky) / S.7311 (Peralta)]. The bill has not yet been introduced in 2012.

Only the Senate passed legislation in 2010 that would have prohibited merchants from imposing a surcharge on a consumer who uses a debit card in a transaction. The Retail Council strongly opposed the first three prints of the bill, arguing that the measure was a thinly-veiled effort by credit card companies to saddle retailers with additional fees for every debit card transaction while simultaneously prohibiting merchants from passing those costs along to customers in a transparent fashion. The Senate amended the bill several times to include provisions acceptable to the Retail Council; the Assembly chose to not consider the legislation in any form as the 2010 session came to its close. The bill, however, was reintroduced in 2011 and remains under consideration by the Assembly Consumer Affairs and Protection Committee [A.8072 (Weprin)].

President Obama signed into law in July 2010 the “Dodd/Frank Consumer Wall Street Reform and Consumer Protection Act,” supported by the Retail Council, which includes a requirement limiting what a debit card issuer may charge for a debit card transaction to an amount “reasonable and proportional” to the incremental costs incurred by the issuer with respect to the transaction. The law also allows merchants to offer discounts and other incentives for payments made by cash, check, debit card, or credit card, without interference from issuers or related parties. And, the new law allows merchants to establish a minimum dollar amount value for acceptance of credit cards (up to $10).

At a glance

• Credit interchange fees often consist of both an ad valorem percentage (e.g., 2 percent) and a fixed-amount-per-transaction (e.g., 15 cents). On a large transaction this may translate to a stable percentage comparable to the typical merchant’s net 2 percent profit margin (e.g., 2.15 percent on a 100-dollar transaction, using the examples above). On a small transaction, the fixed amount causes the percentage cost to rise significantly (e.g., 17 percent on a one-dollar transaction, using the same examples). As a result, when a customer makes a small purchase, such as a bottle of water, a cup of coffee, or a bag of potato chips with a credit card, any profit the merchant might have made essentially is turned over to the financial institutions.
• Interchange fees imposed by financial institutions issuing credit or debit cards have increased exponentially over the past few years as banks and processors continue to charge retailers exorbitant fees to process credit cards as a method of payment. The increased volume in credit card transactions, coupled with fee increases, translates into a windfall for acquirers, a bottom line blow to retailers, and, in the end, higher prices for consumers.
• Despite the crippling impact interchange fees have on retailers’ balance sheets, acquirers continue to mask the true costs associated with accepting credit and debit cards by disclosing only an abbreviated summary of their processing rates and fees. This practice fosters and promotes an uncompetitive marketplace, leaving retailers blind to the true costs associated with accepting cards and unable to make informed choices when choosing a processor.
• Legislation forcing transparency in the interchange fees charged to merchants is fair and increasingly necessary as retailers small and large absorb these costs with little understanding of how or why the fees are assessed on any given credit card transaction.
• Notwithstanding progress at the federal level, the Retail Council remains wary of efforts to arbitrarily prohibit merchants from the access they need to information about their credit and debit card processing obligations. During the 2012 Legislative Session, we will continue to discuss with legislators in New York the very real impact high interchange fees impose upon shoppers throughout New York State.

Retail Council position

Oppose legislation that would limit any merchant’s right to craft and enforce its own policies relative to the returning and/or exchanging of merchandise, including the use of electronic methods to track returns by consumers.

Legislative action

The Retail Council worked constructively with the Legislature and the New York State Consumer Protection Board on Chapter 278, Laws of 2009, which requires retail establishments to add to the list of mandatory disclosures the dollar amount of any fees associated with merchandise returns, among other requirements.

The Retail Council opposes A.3010 (Perry), which would require a store to disclose whether it uses electronic tracking of returns, prohibit certain restrictions against the return or exchange of merchandise, and allow for local laws to supersede. The bill remains in the Assembly Consumer Affairs and Protection Committee.

At a glance

• Return abuse by some consumers and organized retail criminals has become a multi-billion dollar enterprise, with the retail industry losing $14.37 billion in 2011 because of fraudulent returns, according to the National Retail Federation.
• Legitimate retailers would rather not impose strict return policies, but certain safeguards now are necessary to protect merchants against excessive losses and return fraud perpetrated against them.
• Return fraud tactics include the use of stolen or “found” sales receipts, counterfeit sales receipts, counterfeit UPC symbols – all used to return stolen merchandise to the store from which it was originally stolen or from another store within the chain of stores.
• Available tracking software allows a retailer to use objective measurements and standards to evaluate whether to accept a customer’s return. Software seeks certain identifiable patterns of excessive returns and is not designed to reject the returns made by legitimate customers who wish to return items that they do not want. Retailers using tracking devices deny up to 90% fewer returns from their customers than do retailers who do not use such software.
• Protecting consumers’ privacy, tracking software ensures that a customer’s return experience in one store is in no way available to other merchants.
• Because return practices differ for each merchant, each must retain the right to craft return policies that best fits its own business model and its own experiences with its customers. No merchant wants to alienate its customers – but no merchant today can afford to allow fraudsters to perpetrate unabated this costly form of organized retail theft.

Retail Council position

Support the growth and development of health care facilities within retail settings as they gain popularity with patients and help decrease costs of basic services across the health care landscape. Oppose regulations and legislation that would hinder retail clinic operations – including limitations on the scope of practice and marketing efforts, as well as burdensome and unnecessary licensure requirements.

Legislative action

The Retail Council supports efforts to expand the presence of retail clinics in New York, but opposes A.81-B (Paulin)/ S.3673-A (Hannon) for the broad regulatory authority it would give to the Public Health Planning Council and the Commissioner of Health. The bill remains under consideration in the Assembly Health Committee and Senate Finance Committee.

In addition, New York State has a 100-year-old prohibition on the corporate practice of medical professionals, pursuant to section 201-e of the Business Corporation law. Business corporations operating in the state may not employ licensed professionals, forcing all retail clinics in New York to be owned and operated by an entity separate from the retail corporation itself.

At a glance

• Access to affordable health insurance remains a paramount issue as health care costs and the number of uninsured continue to rise. Retail clinics offer a unique and critical opportunity to help offset this national crisis – convenience, quality care, and affordability are all tenets that retail clinic patients rely on.
• Nurse practitioners (NP’s) who provide care to retail clinic patients are already subject to vigorous and intense training and licensure requirements administered by New York’s Department of Education, eliminating the need for further regulations and mandates on their practice of medicine as it relates to retail clinics. Physicians, too, provide various levels of oversight to NP’s who are employed by retail clinics and are fully aware of any scope of practice limitations that apply.
• Affordability and pricing transparency are key elements to the retail clinic business model and offer a new approach to how patients view their health care experience. All services and their respective prices are disclosed conspicuously in each clinic and, on average, range from 50 to 70 dollars. These price points are a small fraction of what a patient would pay in comparison to an emergency room or doctor’s office visit.
• Evidence-based medicine is the foundation to which health care providers treat retail clinic patients. Prescriptions are provided on a limited basis, when absolutely necessary, and, similar to a doctor’s office visit, patients are transferred to nearby hospitals if their condition is outside the scope of practice for the physician or nurse practitioner on call.

Retail Council position

Continue to support proper and effective enforcement of current state laws that criminalize identity theft and require notification of the breach of security of certain computerized information systems. Oppose any action that would unduly infringe access to information retailers need to properly identify, protect, market and extend credit to consumers. Strongly oppose efforts to hold retailers financially liable for any security breach illegally executed by identity thieves and computer hackers.

Legislative action

Indicative of Retail Council support for sensible and effective tools to fight the devastating impact of identity theft, the Retail Council supported laws creating security breach notification (Chapters 442 and 491, Laws of 2005), as well as the state’s law creating the felony crime of ‘identity theft’ (Chapter 619, Laws of 2002). The Retail Council worked closely with lawmakers on the development of New York State’s law allowing consumers to request a ‘security freeze’ on personal information held by consumer credit reporting agencies (Chapter 63, Laws of 2006). During the 2008 Legislative Session, the Retail Council redoubled its commitment to curtailing instances of identity theft and worked with the Legislature on a new law (Chapter 279, Laws of 2008) expanding the provisions of the 2006 ‘security freeze’ law.

At a glance

• The Retail Council shares the state legislature’s concern for innocent victims of credit fraud and identity theft, whose hard-earned credit worthiness is damaged as a result. The retail industry, too, suffers serious customer relations consequences and financial losses whenever such fraud occurs. Retailers, therefore, take very seriously customers’ personal information that is obtained and necessary for business transactions at the point-of-sale.
• Retailers continue to develop and initiate practical standards and safeguards to enhance the protection of their customers’ personal information. This includes the installation of security firewalls and software to protect store and corporate-level database systems, as well as requiring the presentation of clear personal identification prior to first use of a credit account.
• Retailer access to personal information such as Social Security numbers is a critical step in the proper identification and analysis of prospective purchasers, and its access and use should not be arbitrarily curtailed. A narrow legislative focus on retailers and their use of such data without simultaneously addressing all other uses and users is discriminatory and highly objectionable to the retail industry.
• Reflective of the mutual trust that is so important between retailer and consumer, most retail merchants neither sell nor rent their customer information to outside entities.
• Most retailers provide customers with the opportunity to “opt-out” of marketing programs. No merchant wants to irritate his customer base, and an opt-out request is handled with the same care and attention as is a request for additional information. An “opt-in” standard would limit consumer access to important information and, in many cases, special offers that may be of significant benefit and interest to such consumers. The Retail Council strongly opposes efforts to require “opt-in” standards as ultimately harmful to consumers.
• The Retail Council pledges to continue its cooperative and constructive dialog with the state legislature in order to further advance measures that will provide workable, legitimate, and enforceable protections against identity theft, consumer fraud, and organized retail theft.