New Jersey residents are being warned not to misplace or forget about gift cards they receive thanks to recent changes to the state’s unclaimed property law.
When you receive a gift card from a fried or relative, it is common for consumers to tuck it away for a later date, especially if they are already saving for a big ticket purchase.
However, when gift cards are not used within two years of issue, New Jersey residents run the risk of losing the value of the card to the state. The Treasury Department of New Jersey have brought in changes to unclaimed property laws and have made it a requirement for gift card issuers ad resellers to track zip codes on all gift card purchases.
This will allow the treasury to seize any unclaimed gifts once the 2 year period has expired.
Many states operate unclaimed property legislation known as ‘escheat’ laws, although these are usually related to the state begin allowed to claim property of a deceased resident which is unclaimed by surviving family members.
In total, 26 states currently take possession of a desceased person’s estate after 3 years of inactivity. However, the move by New Jersey marks the state out as the first to attempt using personal information from gift card buyers to allow them to stake claim on potentially unused funds.
A lawsuit has already been filed by American Express and the Retail Merchants Association in an attempt to prevent the legislation being passed, citing that it places an ‘undue burden on businesses.’ President of the New Jersey Retail Merchants Association, John Holub said,
Retailers and gift card issuers like American Express have had serious concerns about escheat law since it was passed nearly two years ago.
American Express have gone so far as to remove all gift cards from sale in New Jersey retail locations rather than comply with the law. Blackhawk Network who are responsible for gift cards issued for Barnes & Noble, Home Depot and Sears have also pulled gift cards from sale in New Jersey.
The legal risk, technological burden and steep cost of complying [with the new law] is simply too great,
said Holub. It has been reported that gift card issuer InComm who issue cards on behalf of iTunes, Macy’s, Starbucks and many others are also preparing to follow American Express’ lead. InComm also issue prepaid Visa and MasterCard debit cards under the Vanilla brand name and will no longer offer these for sale in New Jersey as well.
In response to these actions, Treasury Department spokesman Andy Pratt said,
We’re working with industry groups to determine the best way to have merchants collect Zipcodes. We’re not requiring it until we come up with a policy that is uniform and as least onerous as possible.
This indicates that the policy has not yet been finalized. The State of New Jersey took ownership of almost $80 million worth of unclaimed property in 2011.
It is estimated that somewhere between 4 and 16 percent of all gift cards are never redeemed, according to studies by Nielson and Providence College. Previously these funds remained with the merchant, but it is easy to see why the state is eager to take their own slice of this potential profit.
With issuers pulling their gift cards from sale at retailers across the state of New Jersey it is also becoming increasingly difficult for consumers looking to pick up a last minute gift. President and CEO of InComm, Brooks Smith said,
In addition to the compliance issues this law creates, we are very concerned that our New Jersey consumers will not have continued access to their gift card funds. States should not have the right to remove funds from an unexpired gift card.