Section 402A. Merchandise certificates and obligations therefor

1. A
  retail seller may issue merchandise certificates to a retail  buyer,  to
  be  paid  for in instalments and to be used solely in exchange for goods
  and services with  a  cash  sale  price  in  the  face  amount  of  such
  certificates and not redeemable in cash, pursuant to a document executed
  by  the parties as hereinafter provided, which document, notwithstanding
  the definition of obligations contained in subdivision seven of  section
  four  hundred  one,  shall constitute a retail instalment obligation for
  the purpose of this article, shall contain the entire agreement  of  the
  parties,  and shall be subject to all of the provisions of sections four
  hundred three to four hundred twelve, inclusive, except  the  provisions
  of the second sentence of section four hundred five.
    2.  On each issue of merchandise certificates, the document evidencing
  the obligation  therefor  shall  set  forth  a  legend  as  provided  in
  paragraph  (a)  of subdivision two of section four hundred two, a notice
  to the buyer as provided in paragraph (b) of subdivision two of  section
  four  hundred  two, the names of the seller and the buyer, the residence
  or place of business of the buyer as specified by the  buyer,  the  face
  amount of the merchandise certificates issued, and all items required to
  be  disclosed by the act of congress entitled "Truth in Lending Act" and
  the regulations thereunder, as such act and regulations may from time to
  time be amended.
    3. A seller  may,  in  such  a  document,  contract  for  and,  if  so
  contracted  for  charge,  receive and collect a credit service charge at
  rates not exceeding those provided under section four  hundred  four  of
  this  article.  Such credit service charge shall be computed on the face
  amount  of  merchandise  certificates  issued   to   the   buyer,   less
  down-payment, if any.
    4.  The buyer shall have the right to return to the seller at any time
  all merchandise certificates which have not been exchanged for goods and
  services, and the seller shall thereupon credit the buyer with the  full
  face  amount  of  such  unused merchandise certificates returned and the
  amount of the pro rata credit service charge  thereon,  which  shall  be
  computed  as  of the date of issuance of the merchandise certificates so
  returned. Where the amount of the refund of such credit charge  is  less
  than one dollar no refund need be made.
    5. (a) Merchandise certificates issued under this section or the cover
  of the booklet in which they are bound, shall bear:
    (i)  A legend in at least eight-point bold type stating that the buyer
  may return unused merchandise certificates so purchased at any time  and
  that  the  seller will give the buyer credit for the full face amount of
  any certificates so returned and credit for the pro rata credit  service
  charge if the same is one dollar or more;
    (ii)  A legend in at least eight point bold type reading substantially
  as follows: If you wish to purchase,  with  merchandise  certificates  a
  single  item  of goods or services of greater value than the merchandise
  certificates you now  hold,  you  may  save  credit  service  charge  by
  returning your unused merchandise certificates for credit and purchasing
  new certificates; and
    (iii)  In  the  event the statements required by subparagraphs (i) and
  (ii) hereof are set forth on  the  cover  of  a  booklet  in  which  the
  merchandise  certificates  are  bound,  each  certificate  shall  bear a
  notice, "NOT GOOD IF DETACHED".
    (b) If a retail seller  issues  merchandise  gift  certificates  to  a
  retail buyer to be paid for in instalments (1) in good faith, and (2) in
  reliance  upon  a  retail  buyers  statement  that  the buyer intends to
  transfer it to another as a gift, then such  certificate  need  not  set
  forth the legends required by subparagraphs (i) and (ii) above; provided

  the  certificate shall bear the legend "GIFT CERTIFICATE" and the seller
  shall give the buyer at the time  of  issuance  of  such  certificate  a
  statement,  or  facsimile of such certificate, which shall identify such
  certificate,  and shall contain the legend required by subparagraphs (i)
  and (ii) above.
    6. Notwithstanding the provisions of subdivision three of section four
  hundred three of this article, the buyer shall have the right to  return
  to  the  holder  of  a retail instalment obligation executed on or after
  October first, nineteen hundred sixty-two, for merchandise certificates,
  at any time all merchandise certificates which have not  been  exchanged
  for  goods  and  services,  and the holder shall thereupon credit to the
  obligation to the extent of the amount owing by the  buyer  thereon  the
  full  face  amount  of such unused merchandise certificates returned and
  the amount of the pro rata credit service charge thereon, which shall be
  computed as of the date of issuance of the merchandise  certificates  so
  returned.  Where  the amount of the refund of such credit service charge
  is less than one dollar no refund need be made.