(a) As used in this section: (1) “Trading stamp” means any stamp or similar device issued in connection with the retail sale of merchandise or service, as a cash discount or for any other marketing purpose, which entitles the rightful holder, on its presentation for redemption, to receive merchandise, service or cash. “Trading stamp” shall not mean any redeemable device used by the manufacturer or packer of an article, in advertising or selling it, or any redeemable device issued and redeemed by a newspaper, magazine or other publication; (2) “trading stamp company” means any person engaged in distributing trading stamps for retail issuance by others, or in redeeming trading stamps for retailers, in any manner; and (3) “person” means any individual, partnership, corporation, limited liability company, association or other organization.

(b) No trading stamp company shall distribute or redeem trading stamps issued after October 1, 1959, in this state unless (1) each stamp has legibly printed upon its face in cents or any fraction thereof a cash value determined by the company and (2) the holders may, at their option, redeem the stamps in cash when duly presented to the company for redemption in a number having an aggregate cash value of not less than twenty-five cents.

(c) No trading stamp company shall distribute trading stamps in this state or shall redeem trading stamps issued after October 1, 1959, therein until it has, on or before January first annually, paid to the Secretary of the State a license fee of one per cent of the principal sum of the bond required to be filed under subdivision (2) of this subsection and has filed with said secretary: (1) A statement of registration accompanied by representative samples of its stamps, stamp collection books, stamp redemption catalogs and stamp distribution and redemption agreement forms, currently used in this state. Each such statement shall provide the following information: (A) The name and principal address of the company; (B) the state of its incorporation or origin; (C) the names and addresses of its principal officers, partners or proprietors; (D) the address of its principal office in this state; (E) the name and address of its principal officer, employee or agent therein; (F) the addresses of the places where its stamps are redeemable therein; (G) a short form of its balance sheet as of the end of its last fiscal year prior to such filing, certified by an independent public accountant; and (H) unless the principal sum of the bond required by subdivision (2) of this subsection to be filed by the company is the maximum amount required under subsection (d), a statement of its gross income from its business in this state as a trading stamp company during such last fiscal year, certified by an independent public accountant; and (2) a bond payable to this state and executed by the company and a corporate surety qualified to do business in this state, which is conditioned upon the performance by the company of its obligation to redeem trading stamps issued by retailers in this state, when they are presented for redemption by the rightful holders. Each trading stamp company shall notify the Secretary of the State of any change in the addresses of the places where its stamps are redeemable in this state within ten days of any such change. If the company defaults in performing such obligations, all rightful holders of trading stamps of such company, including retailers in possession of such stamps for issuance to customers, shall be entitled to make claim against said bond. Any such holder may, within three months after such default, file a complaint with the Secretary of the State, who shall forthwith make a determination whether there has been a default. If said secretary determines that there has been such a default, he shall give notice of such determination to the company and, if such default is not corrected within ten days, he shall publish notice of such default in three consecutive publications of one or more newspapers having general circulation throughout this state and therein require that proof of all claims for redemption of the trading stamps of such company be filed with him, together with the trading stamps upon which the claim is based, within three months after the date of the first such publication. Said secretary promptly after the expiration of such period shall determine the validity of all claims so filed. Thereupon said secretary shall be paid by the surety such amount, not exceeding in the aggregate the principal sum of the bond, as is necessary to satisfy all valid claims so filed together with reasonable administrative expenses incident to the determination and payment of such claims. Said secretary shall promptly thereafter make an equitable distribution of the proceeds of the bond, less such reasonable administrative expenses, to such claimants and shall destroy the trading stamps so surrendered. If the amount paid by the surety is not sufficient to satisfy in full all valid claims and administrative expenses, the secretary may bring an action in a court of competent jurisdiction against the trading stamp company to recover, on behalf of the claimants, the difference between the aggregate value of such claims, including such administrative expenses, and the amount paid by the surety.

(d) The principal sum of the bond to be filed shall be as follows: If the company has not previously done business as a trading stamp company in this state, or if the company's gross income from such business in this state during its last fiscal year was not in excess of two hundred and fifty thousand dollars, thirty-five thousand dollars; if such gross income exceeded two hundred and fifty thousand dollars but did not exceed five hundred thousand dollars, fifty thousand dollars; if such gross income exceeded five hundred thousand dollars but was not in excess of seven hundred and fifty thousand dollars, seventy-five thousand dollars; and if such gross income exceeded seven hundred and fifty thousand dollars, one hundred thousand dollars. On the effective date of each new bond, any and all liability on all bonds previously filed under the provision of subsection (c) shall terminate, and all rightful holders of trading stamps who prosecute their claims under said subsection shall prosecute such claims solely against the new bond and only by filing proofs of claim with the Secretary of the State in the manner provided in said subsection.

(e) No trading stamp company shall cease or suspend the redemption of trading stamps in this state without filing with the Secretary of the State at least ninety days' prior written notice of its intention so to do and concurrently mailing a copy of such notice to each retailer within this state which has at any time theretofore within one year issued trading stamps which the company is obligated to redeem.

(f) Notwithstanding the provisions of subsection (b), a trading stamp company may redeem trading stamps if issued within the state prior to October 1, 1959, notwithstanding the fact that any such trading stamp does not have legibly printed upon its face in cents or any fraction thereof a cash value as determined by such trading stamp company.

(g) No person shall issue to his customers in connection with the sale of merchandise any trading stamp, coupon or similar device which has previously been issued in such connection by any other person responsible for the redemption thereof, unless the consent of the latter has been first obtained.

(h) The Secretary of the State shall investigate compliance with this section and shall notify the Attorney General of any violations of which he may have knowledge. Any trading stamp company which violates any provision of this section shall be fined not more than one thousand dollars, and the Superior Court shall have jurisdiction in equity on the complaint of any interested person to restrain and enjoin the violation of any of said provisions.

(1959, P.A. 528, S. 1–8; 1961, P.A. 320; 1967, P.A. 640; 747; P.A. 95-79, S. 160, 189.)

History: 1961 act amended Subsec. (c) re payment of administrative expenses from bond proceeds and added provision re court action against trading stamp company to recover claims not paid by surety; 1967 acts raised bond for companies which have not previously done business in state or which had gross income of $250,000 or less from $25,000 to $35,000 in Subsec. (d), required that trading stamp company notify secretary of the state of change in address of any redemption location within ten days in Subsec. (c) and added provision in Subsec. (h) re secretary of the state's duty to investigate compliance and notify attorney general of violations; P.A. 95-79 amended Subsec. (a) to redefine “person” to include a limited liability company, effective May 31, 1995.

Cited. 153 C. 213.