InComm, Blackhawk Network, Gift Card Makers, Follow AmEx Exit From New Jersey

Like many states on the hunt to fill in budget shortfalls, New Jersey is getting creative. The state is making a grab for its residents' gift cards.

If you live in New Jersey and wait more than two years to cash in on that Red Lobster gift card that your boss gave you, you'll be out of luck. Under a new state law, New Jersey will take control of funds on gift cards that have not been used for two years. The law could potentially translate into millions of dollars for the Garden State, which would hold the gift card money as "unclaimed funds." That means New Jersey will keep that money in state coffers rather than a consumer being able to access it through the card.

But gift card makers, unwilling to part with so much money in unredeemed funds, are fighting back, pulling out their wares from the state altogether. On Thursday, Blackhawk Network and InComm, the companies behind hundreds of major name-brand gift cards sold through thousands of vendors, said they are pulling their cards from New Jersey vendors starting on June 30 if not sooner. Earlier this week, American Express pulled its cards from New Jersey retailers.

The new law would make card sellers responsible for gathering from buyers certain personal information, such as a ZIP code. That information would then be used by New Jersey to collect the unused money on the cards into the state's unclaimed money fund 24 months after the last time these cards were used.

Procrastinating residents could still obtain any remaining balances on the gift cards by contacting the state's unclaimed funds office.

Under federal law, gift cards must be usable for at least five years after purchase, though most do not have any expiration date. Consumer advocates have criticized gift cards because consumers often forget about them or leave balances unused.

Redemption rates are low for cards and as much as $41 billion in the United States went unspent on all gift cards from 2005 to 2011. In some cases, activation or dormancy fees can eat up small amounts of money left on cards. All these things have made them lucrative for card makers.

InComm claimed that the technology to collect a buyer's information and route it through the multiple channels -- the vendor, the partner brand, the card processor -- does not exist, which makes compliance with the law difficult.

"We have hundreds of card partners and dozens of platforms [for card processors]," Brooks Smith, president and CEO of InComm told The Huffington Post. "It's impossible to bring that data back to the issuer."

New Jersey State Treasury spokesman Andy Pratt said rules about what kind of information would be collected have not yet been established, making the gift card issuers' retreat a surprise for the state. "We have to ask, why is this so important that they get to keep [an] unused balance?"

While the new law is part of the state's attempt to make up for budget shortfalls, Pratt said the amount it would add to the budget would not be known until after June 30, 2013, when the first unused gift card funds would be tapped by the state.

The unused gift cards, travelers' checks and money orders would net $79 million in revenue for New Jersey, according an estimate for the 2011 fiscal year, the Associated Press reported.

So far New Jersey is the only state that is trying to tap unused card balances as a revenue source.

Jennifer Kim, a consumer advocate for the New Jersey Public Interest Research Group, said the additional restrictions --such as handing over personal information at the point of purchase -- will make the cards less consumer friendly, the Associated Press reported.

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Comments

[mkinyon120]

03:09 PM on 06/20/2012

I think this is why governments want all your money spent and transferred electronically. Now they can take it with just a click of a mouse.

Time to go back to cash.

[Bigrcube]

11:34 AM on 04/09/2012

Ahhhhhhh.....re: Under federal law, gift cards must be usable for at least five years after purchase.......So if THAT is true, then HOW can NJ enact and enforce such a law after TWO (2) years?!?! Am I missing something?!

[Writerdude2011]

08:28 PM on 04/08/2012

State governments have become the biggest con artists of all. One company left the state of New York seven years ago and just got hit with a judgement for $300,000 for not having NY Workmens Comp insurance for the past even years when they weren't even there! And the clincher is they only had one employee when they were there. The state of New York has filed over 10,000 judgements against small business in New York in the past few years for hundreds of thousands in fines per company that had put many small companies out of business. And since Workmens comp insurance only costs $500 for out companies, the penalties are an obvious cash grab for a state that has been mismanaged and is trying to solve its problems on the backs of small businesses. State governments are out of control and it's time something is done about it.

[xenubarb]

11:44 AM on 04/08/2012

You gotta give 'em credit for creativity and chutzpah!

[camelias and sweet tea]

08:41 PM on 04/07/2012

They have legalized theft in New Jersey...only for themselves though.

[Bigrcube]

11:35 AM on 04/09/2012

Their LARGE and IN-Charge Governor has got to eat.

[camelias and sweet tea]

08:40 PM on 04/07/2012

And that is NOT ALL N.J. will try and take. My daughter has a checking and savings account with her bank. Her savings is for emergency and only has $800.00, she does not add to it just lets it sit there (and collect all that BIG interest, ha ha ) but she uses her checking almost daily. Bank sent a letter that her savings account has not been used and would be sent to N.J. as unclaimed money unless she went to bank IN PERSON and took it or put it into checking acct. They were going to take her $800.00, how about that ONE.!!!

[lita m]

06:59 PM on 04/07/2012

Well, they've got to pay for that helicopter and limo ride to "someone's" kid's sporting event, now, don't they?

What's next? Going after that "unused" money in their checking accounts?

[john yunker]

05:23 PM on 04/07/2012

Time limit is unacceptable.If you hve $3.14 left on a card that is nearly 2 years old and your birthday or Chrismas, Graduation is one week past 2 year mark and you know you will get another card from family friends because that is a place you enjoy to go they will give you another card to add to that $3.14 but it willbe gone because they are telling you that you must spend YOUR MONEY within certain period of time is like saying you must spend the money in your own bank account or preloaded debit card...BALONEY !!

[lawa]

04:49 PM on 04/07/2012

gift cards depend on you to let them expire and get to keep the cash. i don't really like that idea there should be no expiration date. but for the big bully government to take the money is beyond creative. union busting, ending collective bargaing, lay off police and teachers isnt enough.? how about instead of decreasing corperate taxes how about letting them pay their fair share.

[Truthiness4Me]

04:25 PM on 04/07/2012

Wow, this has to be one of the stupider things I've read today. Is this some of that "personal resposibility" that the republicants are always talking about? If you don't take the "personal responsibility" to use your gift card, new joisey will just take it and keep the money? Sheesh...

[hsabroker]

03:45 PM on 04/07/2012

And I thought Maryland was the grabbiest state in the union! I just hope Gov. O'Malley doesn't get wind of this.....

[coolair120]

03:22 PM on 04/07/2012

And THIS is one of but many reasons why I left this poor excuse for a state.

[vtmilitia]

03:16 PM on 04/07/2012

If they were smart they would issue their own Jersey card and cut out the middle man.

[Neanderthaal]

04:21 PM on 04/07/2012

It would be good for five days, then the state seizes the balance.
It would discount 20% per day until after five days the state seizes the balance.

To those of you who thought Chris Christie was The New Conservative Messiah...he's not. There is very little that is conservative about him.

This is New Jersey, folks. Smart as New York, which is driving the productive folks out by the thousands as they forever jack up taxes and audits.

Get a clue, people.

[qud]

02:25 PM on 04/07/2012

Isn't this just theft. My money is my money, no matter where I choose to keep it or in what format. Travellers checks as well!! I am travelling again later, so in order not to incur more fees I keep them for a later date. Unforseen circimstances delayes my travel but I am still going. Now I still incur all sorts of hassles (not sure from this article if there will be associated costs) to get the money back from big brother. What child thought of this idea?

[pmcurl]

04:19 PM on 04/07/2012

As I stated in another post last night, if the state did that to me I would make it back through my income tax.That is the fastest and easiest way to deal with this. I am a completely honest person but I would not hesitate to cheat on my taxes up to the amount of the gift card, as this money is MINE and I have a right to it NOW. It is never stealing to take back what is yours.

[qud]

04:44 PM on 04/07/2012

agreed

[breakingpoint]

01:58 PM on 04/07/2012

you should be able to cash in your gift cards for cash

[lita m]

07:04 PM on 04/07/2012

You're right, of course. After all, if the rightful owner of the gift card can't cash it out, why should the state be allowed to do so? This is nothing more than state-authorized pillaging. But theft by any other name is still... theft.