New Jersey Law Causes Companies To Pull Gift Cards

Apr 9, 2012

Transcript

STEVE INSKEEP, HOST:

At some point, you likely received a present from a prepaid gift card from the person who wasn't exactly sure what you'd want. Residents of New Jersey may not be able to buy them for much longer. American Express has pulled its gift cards from the state, and other big industry players are threatening to do the same. They oppose a new law that would allow New Jersey to claim unused gift card balances after two years. NPR's Joel Rose reports.

JOEL ROSE, BYLINE: Think about the Home Depot card floating around in your junk drawer, and that iTunes card in your wallet. Maybe you've got a few unspent dollars here, five dollars there. Add it up, and you're looking at real money. And the state of New Jersey would be happy to be hold onto it for you.

ANDY PRATT: If you never use that card, the value of that card is lost. The retailer doesn't go back, find you, say, look. You know, it's been five years since you've bought this card. Would you like your money back?

ROSE: Andy Pratt is a spokesman for the New Jersey Department of Treasury. He says a state law passed in 2010 will protect consumers by forcing gift card companies to hand over those unspent balances if the card has been inactive for two years.

PRATT: The state gets that card. It will give you that money, and you just have to acquire, file a claim and you get the money back.

ROSE: But retailers and gift card companies say the new law is solving a problem that doesn't exist. John Holub is president of the New Jersey Retail Merchants Association. He says the federal government already has lots of rules in place to protect consumers.

JOHN HOLUB: You would be hard-pressed to find any retailer these days that has expiration dates and even fees associated with their gift cards anymore. These cards are good forever. There's really no need for their protection.

ROSE: Holub points out that New Jersey won't track you down to give the money back, either. He thinks the real point of the law is to bring in more revenue for the state. Retailers tried to fight the law in court, but now that an injunction has been lifted, several big players in the gift card industry say they'll pull their products out of New Jersey rather than comply. Brooks Smith is the CEO of InComm, a company that provides gift cards for Starbucks, Applebee's and iTunes, among others.

BROOKS SMITH: This lawn's already been mowed. There's nothing left for you to get. The gift card industry as a whole looks at this as a killer. The industry's out of business.

ROSE: Retailers and gift card companies are particularly upset about a provision in the new law that would require them to track the zip codes of buyers. In order to claim unspent balances as lost property, New Jersey has to show that the gift cards were actually purchased by state residents. Treasury spokesman Andy Pratt says that shouldn't be too hard for retailers to do.

PRATT: It's just a zip code. It is a far smaller piece of data than they're already collecting about many of their customers already.

ROSE: But the gift card industry doesn't see it that way. Teri Llach is the chief marketing officer of Blackhawk, another major gift card company that's threatening to pull out of New Jersey. She says no other state asks retailers to collect and track this kind of information, so the systems for doing it just don't exist.

TERI LLACH: We don't want consumers in New Jersey not to have access to gift cards. They'll have to go to another state to get a gift card. We don't want to do this. But we have no choice. We can't comply with the law.

ROSE: Llach hopes the industry can reach a compromise with Governor Chris Christie, a Republican who's tried very hard to make New Jersey look attractive to business. But if they can't, Llach says Blackhawk will pull its gift cards out of stores in June. Joel Rose, NPR News. Transcript provided by NPR, Copyright National Public Radio.