A new gift card law passed in New Jersey has sparked a debate between the state and its retailers, including gift card distributors like American Express. The law requires that leftover funds on cards be turned over to the state’s unclaimed property fund after two years, but retailers say the unspent balances should be given back to corporations.
Gift Card Balances Go Unspent Every Year
Millions of consumers purchase gift cards every year. Taking this gifting approach has become popular because it allows givers to provide their recipients with the power to purchase their own gifts while relinquishing some of the pressure to buy the right item.
Gift cards also make it easier for recipients to purchase items online if they desire, especially if they don’t have good enough credit to possess credit cards.
Since gift cards often are supplied with round balances, it’s difficult to figure out how to spend every penny on them. As a result, $6 billion in gift card balances go unspent every year nationwide.
New Jersey Law Sends Leftover Funds to State
In an attempt to round up leftover gift card balances, New Jersey passed a new law that requires gift card sellers to hand over forgotten funds to the state. When the funds are received, they are placed into the state treasury where consumers can then reclaim balances forever.
New Jersey retailers oppose this law, stating that the funds should instead be turned over to corporations. They claim that the law is nothing more than the government’s attempt to plug holes in the state budget and that funds won’t actually be returned to the customer as claimed.
In protest, American Express and other gift card sellers have pulled out of the state, while the New Jersey Retail Merchants Association warns that the law will cost millions in sales taxes each year.
Though both sides say that they have consumers’ best interests in mind, ironically, it is New Jersey residents who could suffer from a lack of gift cards due to seller protests, or an inability to claim leftover funds if the law is ever overruled.