In this title the following words have the meanings indicated. “Trading stamp” means a stamp or other similar device issued in connection with the retail sale of goods or services, as a cash discount or for any other marketing purpose, that is redeemable for cash, goods, or services. “Trading stamp” does not include a redeemable device that: a manufacturer or packer of an article uses to advertise or sell the article; or a magazine, newspaper, or other publication issues and redeems. “Trading stamp company” means a person who, in any way: distributes trading stamps for retail issuance by others; or redeems trading stamps for retailers.

A person must be registered with the Secretary of State whenever the person does business as a trading stamp company in the State.

On or before July 1 of each year, each trading stamp company shall: submit to the Secretary of State: a statement of registration; samples of its current trading stamps, trading stamp collection books, trading stamp redemption catalogues, and trading stamp distribution and redemption agreement forms; a short form of its balance sheet for its last fiscal year, certified by an independent certified public accountant; and a bond in accordance with § 13-104 of this title; and pay to the Secretary of State a fee of $25. The statement of registration shall include: the name and principal address of the trading stamp company; the state of its incorporation; the names and addresses of its principal officers, partners, or owners; the address of its principal office in the State; the name and address of its principal officer, employee, or agent in the State; the address of each place in the State where trading stamps will be redeemed; and the gross income of the trading stamp company from its trading stamp business in the State for its last fiscal year, certified by an independent certified public accountant, unless it submits the maximum bond under § 13-104 of this title.

The bond required by this subtitle shall be: payable to the State; conditioned that the trading stamp company shall redeem its trading stamps whenever rightful holders present them for redemption; and executed by: the trading stamp company; and a corporate surety qualified to do business in the State. The amount of the bond shall be based on the gross income of the principal obligor from trading stamp business in the State during its last fiscal year. The amount of the bond is: $25,000, if the principal obligor has not previously done business in the State or if the gross income was not more than $250,000; $50,000, if the gross income was more than $250,000 but not more than $500,000; $75,000, if the gross income was more than $500,000 but not more than $750,000; and $100,000, if the gross income was more than $750,000.

If a trading stamp company fails to redeem its trading stamps, each rightful holder of its trading stamps may make a claim against the bond in accordance with this section. For purposes of this section, a rightful holder includes a retailer that rightfully holds trading stamps for issuance to customers. The claim shall be submitted to the Secretary of State within 3 months after the failure to redeem trading stamps. The Secretary of State promptly shall determine whether the trading stamp company should have redeemed its trading stamps. If the Secretary of State so determines, the Secretary of State shall notify the trading stamp company of that determination. If the trading stamp company fails to redeem its trading stamps within 10 days after the notification, the Secretary of State shall publish notice of the failure in 3 consecutive issues of 1 or more newspapers that have general circulation in the State. The notice shall state the time within which proofs of claim and the trading stamps on which they are based must be submitted to the Secretary of State. Proofs of claim and the trading stamps on which they are based shall be submitted to the Secretary of State within 3 months after the first publication of the notice. Promptly after the end of the 3-month period, the Secretary of State shall determine the validity of all claims. The surety shall pay to the Secretary of State the lesser of: the amount necessary to satisfy: all valid claims; and reasonable administrative costs to determine and pay the claims; or the amount of the bond. The Secretary of State promptly shall: distribute equitably to the claimants the proceeds of the bond, less reasonable administrative costs; and destroy the trading stamps surrendered to the Secretary of State. On the effective date of each new bond that a trading stamp company submits, all liability on earlier bonds ends. A rightful holder who makes a claim under this section on or after that date shall make the claim only against the new bond.

A trading stamp company may not do business as a trading stamp company in the State unless: a rightful holder may redeem trading stamps for cash if the trading stamps have a total cash value of at least 25 cents; and the cash redemption value of the trading stamps is at least equal to the highest cash redemption value that the trading stamp company offers in any other jurisdiction. Each trading stamp collection book shall contain a notice that states: “If the total cash value of your trading stamps is at least 25 cents, they may be redeemed for cash instead of goods. The cash value of a filled book of trading stamps is at least $(cash value to be stated)”. The notice shall be printed in 12 point or larger type on the inside front cover of the book. The trading stamp company shall display the same notice conspicuously at each place where the trading stamp company redeems trading stamps.

Each retailer shall display conspicuously at each place where the retailer issues trading stamps the address of the nearest place where the trading stamps may be redeemed.

At least 90 days before a trading stamp company ends or suspends the redemption of trading stamps in the State, the trading stamp company shall: notify the Secretary of State in writing of its intention to end or suspend the redemption of trading stamps; and mail a copy of the notice to each retailer in the State that, within the previous 12 months, issued trading stamps that the trading stamp company is bound to redeem.

While doing business as a trading stamp company in the State, a trading stamp company may not: commit fraud; make a false representation; or use a lottery.

A person who violates this title is guilty of a misdemeanor and, on conviction, is subject to a fine not exceeding $1,000.