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Title 24: Impact Extends Beyond California

BY Marianne Wilson

On July 1, 2014, recent updates to the 2013 California Building Energy Efficiency Standards — Title 24 — went into effect.

The new, tougher standards are estimated to increase energy efficiency by 30% in non-residential buildings compared with the 2008 version. The increase will help California achieve its ambitious goal: Under Title 24, all new commercial buildings must be net-zero energy by 2030.

Among other requirements, the new standards include stipulations that manual lighting controls be accessible on a room-by-room basis, and occupancy sensors be used in corridors, stairwells and aisles/ open areas in warehouses.

In addition, automated demand response lighting systems are required in buildings 10,000 sq. ft. and larger, and daylight harvesting is required in primary and secondary side-list areas.

Since many other states look toward California’s environmental standards as models for their own, it’s likely that these standards will spread.

Sefaira, a software company offering cloud-based computing for high-performance building design, detailed on its corporate blog how Title 24 revisions will impact building construction nationwide. According to Sefaira, the changes will:

Drive adoption of building energy codes: Currently, all but seven U.S. states have commercial building energy codes in place, and many are continually updating to the most recent (and increasingly stringent) standards. The codes are also becoming increasingly performance-based.

As the construction industry rises to California’s challenge, it will also be building the capacity to achieve similar results elsewhere. Expect the adoption of performance-based energy codes to accelerate throughout the nation.

Speed the development of building monitoring and management technologies: Title 24 revisions focus on delivering measurable whole building energy reductions, which will create a large market for an array of “smart building” technologies required to measure and manage energy use across different building types.

The changes will speed the development of technologies around management of peak energy loads, plug load controls, advanced lighting controls and demand response technology.

Accelerate on-site energy storage: California is aware that a steep increase in renewable energy must come with an investment in a smart electricity grid — and energy storage is a key part of the equation. Watch for building-level storage technologies to become more numerous, more efficient and cheaper.

Reduce the cost of high-performance building: California’s code provides certainty around the market for high-performance buildings and related technologies. This will drive increased investments in these technologies, which in turn will drive down costs. An emphasis on real energy savings will also improve financing options for buildings that can deliver a clear return.

Also, Title 24 will spread Zero Net Energy know-how throughout the construction industry, a critical step toward reducing costs and mainstreaming high-performance design.

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Unclaimed Gift Card Balances

BY CSA STAFF

By Breton Leone-Quick and Steve Ganis

Are the amounts of unredeemed balances on your company’s gift cards being tracked, reported and paid over to your state of incorporation?

If the answer is no, you could be at risk for significant liability, depending on the outcome of a case currently pending in Delaware. Every company with a gift card program should be aware of this case, titled State of Delaware v. Card Compliant, et al, which could have wide-ranging implications for how unredeemed balances on gift cards must be treated.

Every state has a series of statutes that are commonly referred to as abandoned property laws. These laws include a definition of what constitutes abandoned property, and they also create requirements for the reporting and payment of that property to the state.

In Delaware, and in numerous other states, the abandoned property laws specifically include balances on unredeemed gift cards within the definition of abandoned property. These balances are considered “abandoned property” after five years, and the statute requires any person or company holding abandoned property to pay that property over to the State of Delaware.

But, in practice, most companies are not paying unredeemed gift card balances to their state of incorporation. This is because the general practice has been for companies to hire a third-party program manager to run their gift card program. The program manager is responsible for issuing the gift cards, tracking their sales and redemptions, and providing other administrative support. The third party is also identified as the holder or owner of unredeemed gift card balances, and is typically incorporated in a state that does not include unredeemed gift card balances in its definition of abandoned property.

To date, the understanding has been that the applicable abandoned property laws are those of the state of incorporation of the program manager. And because those laws do not include unredeemed gift cards in their definition of abandoned property, there was no need to report or pay over unredeemed gift card balances to any state.

But the Card Compliant case challenges this basic assumption. The central allegation in the case is that even though companies contract with a program manager, the program manager is not really the holder of unredeemed gift card balances. Rather, the sponsoring company itself is the actual holder. Under this theory, it is the abandoned property law of the sponsoring company’s state of incorporation — not that of the program managers’ state of incorporation — that controls how unredeemed gift cards must be treated.

Although the Card Compliant litigation is in its early stages, it raises several implications:

• This theory could be applicable to non-Delaware corporations. Even though the Card Compliant case is brought against Delaware corporations under Delaware state law, it could still impact companies incorporated in other states. This is because the abandoned property laws in numerous states other than Delaware include unredeemed gift card balances in their definition of abandoned property.

• This may increase state audits. Most state abandoned property laws provide the state an opportunity to conduct audits of companies to determine if those companies are properly reporting and paying over abandoned property to the state. The Card Compliant litigation may prompt the State of Delaware to conduct specific audits of other companies that are not defendants in the Card Compliant suit.

• States have powerful incentives to conduct these audits. First, there is significant money at stake. One study cited in the Card Compliant complaint estimates that there is potentially up to $8 billion of “abandoned” unredeemed gift card balances that states could argue belong to them. Second, seeking recovery of unredeemed gift card balances administratively is cheaper for states than bringing actions under their false claims acts.

• The scope of potential exposure is much more than the face value of the unredeemed cards. Companies should be aware that their potential exposure under the theories advanced in the Card Compliant litigation could far exceed the face value of their unredeemed gift cards.

In addition to understanding these implications, companies should assess their level of potential exposure under the Card Compliant theory and analyze options for restructuring their gift card programs in case the plaintiff’s theory is adopted. These proactive steps can help minimize any adverse impacts that may flow from the ultimate decision in the case.

Breton Leone-Quick is a member in the litigation practice of Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, P.C., a full-service law firm based in Boston. Steve Ganis is counsel at the firm.

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Ensuring a Perfect Fit

BY CSA STAFF

Helping customers achieve a perfect fit the first time around is the holy grail for many online retailers, and there’s little mystery why: A less-than-ideal fit is the No. 1 reason online purchases are returned. It’s difficult for a consumer to visualize how an item on a digital screen will look on their body. It’s especially challenging for women’s apparel because no two brands size their products the exact same way. Romney Evans, cofounder of True Fit Corp., recently explained to Chain Store Age how new fit technology leverages personalized consumer data and purchase history to offer individual online apparel, accessory and footwear recommendations, helping customers determine whether an online purchase has the proper size, shape and style for their unique proportions.

What is the main motivator for retailers to invest in fit technology?

The digital apparel and footwear market is booming, but online sales have been suppressed relative to other consumer categories due to low consumer confidence. Only 10% to 12% of apparel/footwear is bought online, and as much as 40% of these online sales are returned. This is because so few consumers are confident that they’re going to have a successful purchase, with unsure fit topping the list of reasons why.

To solve the confidence challenge, retailers need a translation service that shows consumers which styles fit and flatter and translates size and designer intent for each shopper. This kind of one-to-one personalization technology allows retailers to maximize revenue by offering consumers high confidence, personalized fit recommendations that drive new sales and fewer returns.

What role does technology play in the division of consumer spending between digital and brick-and-mortar?

In recent years, technology has become the common denominator between digital and brick-and-mortar channels, especially as shoppers diversify their path to purchase and alter spending preferences. Technology can help bring the confidence of in-store purchasing to the digital world, while bringing some of the data-driven convenience and richness of digital to brick-and-mortar. After all, retailers who offer consumers a rich, easy and confident shopping experience will be well positioned to hold a disproportionate share of the increasing percentage of digital sales whether online or in-store.

How does a data-driven approach optimize conversions for retailers and product discovery for consumers?

A data-driven approach allows retailers to leverage massive data on the backend in order to keep use effort very low. With just a little information from users, retailers can help their consumers efficiently discover items they’re most likely to love and keep.

In addition, retailers can deploy technology on the backend that will analyze millions of styles in seconds and prioritize items that have attributes that most closely match up with the user’s attributes. The faster consumers find relevant styles, the more likely they are to buy.

What does True Fit offer?

True Fit provides consumers with personalized recommendations and also provides insights to partnering retailers and brands, which leverage these insights to accelerate personalization and growth, with the ultimate goal of increasing sales and decreasing returns.

How does True Fit technology help break down the main barriers to online shopping: fit and personalization?

True Fit’s ‘Confidence Engine’ powers discovery and confidence. Its machine-learning algorithms get smarter over time, analyzing a user’s profile and transaction history to generate personalized recommendations across all styles for every consumer. In its essence, it’s a relationship solution and a product solution; it churns out suggestions based on items consumers already own and love, and gets them into new styles and brands that they’re going to keep.

The honesty in True Fit’s scale rating gives retailers transparency with shoppers, turning browsers into buyers and buyers into repeat buyers.

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