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TagsBY YURI RESETOVS
NEWJERSEYNEWSROOM.COM
You could say that the dispute started at the beginning of 2011, when New Jersey lawmakers voted for a law that would allow the state to claim the remaining balance on gift cards that remained unused for two years after their purchase.
The law seeks to use the unused balances to “be used for the benefit of all New Jerseyans to prevent tax increases and service cutbacks,” the state’s Treasury department states.
The amendment to the Uniform Unclaimed Property Act also includes an abandoned traveler’s check if it is not cashed or spent in three years from the purchase date – instead of 15 years under the previous law.
“The proposals incensed the New Jersey Retail Merchants Association, New Jersey Food Council and American Express, which filed separate suits seeking to block the law,” reported staff writer Hugh R. Morley for The Record.
At the beginning of the month, American Express Co. became the first company to stop the sale of its gift cards in New Jersey pharmacies, groceries and convenience stores. The only way to buy an AmEx gift card is directly from the company.
New Jersey’s Treasury Department will require sellers to obtain the ZIP code of everyone who buys a gift card; if there is a balance on the card after two years, the state hopes to claim the value, reports Angela Delli Santi for the Associated Press.
In January 2011, New Jersey Governor Chris Christie’s administration estimated that the amendment would bring in $80 million to help with the state’s budget problems. However, the value of unused gift cards (“spillage”) from last year was $2 billion, down from $8 billion in 2006.
As expected, the dispute at hand is between the state and its merchants and credit card companies over who the money belongs to. Some argue that the unused money should go to the merchants who sold the cards instead of being confiscated by the state.
The conservative organization Americans for Prosperity, financed by David Koch, released a radio spot aggressively targeting the law: “This is nothing more than a hidden tax hike. At what point does taxation become piracy?”
According to the National Conference of State Legislatures, about half of states have laws that give them authority to claim all or a portion of unused gift cards or gift certificates, usually after three to five years of inactivity, writes Sandra Block for USA Today.
This leaves many asking if gift cards should simply have an expiration date, such as five years after their activation. If there is an unused balance at the time of expiration, it should be on account of the card recipient, with the spillage collected by the vendor that sold the card.
*The law seeks to use the unused balances to “be used for the benefit of all New Jerseyans to prevent tax increases and service cutbacks,” the state’s Treasury department states.*
Here's the full quote from the Treasury document:
*Is the State acting to protect consumers? Yes. Every penny the State holds from the transfer of unused gift cards to the Unclaimed Property Administration can be reclaimed by consumers – forever. And the value of the card is available to the customer – with interest – forever. There is no time limit for redemption from the State. And if the money is never claimed by a consumer it can be used for the benefit of all New Jerseyans to prevent tax increases and service cutbacks. In stark contrast, companies and banks that sell gift cards routinely keep some or all the value of the cards as windfall profits.*
Is it any wonder why the press is held in such low esteem?