In two New England states, there’s a struggle under way over gift card funds.
A Dec. 20th warning to consumers from New Hampshire’s Attorney General shined a spotlight on retailers who are trying to bypass the state’s gift card rules (Hat tip: All American Patriots). Since New Hampshire’s Consumer Protection Act prohibits any fees that lower a gift card’s value, as well as expiration dates on gift cards valued at $100 or less, certain issuers have attempted to get around the state’s law by instead selling cards issued by national banks.
(A recent federal court decision ruled that issuers may charge fees on these gift cards, since they are governed by federal law as opposed to state law. According to New Hampshire Attorney General Kelly A. Ayotte’s press release, she has asked the U.S. Supreme Court to review that decision.)
Meanwhile, the neighboring state of Maine is using its unclaimed property law to demand a portion of the funds left on dormant gift cards. As the Canadian Press reports, “Other states have used similar laws to tap the value of unused gift cards issued by in-state companies, but state Treasurer David Lemoine believes Maine is the first to seriously pursue national retailers.”
Although Maine is among the states that prohibit gift card expiration dates, gift cards are nevertheless considered “dormant” after two years, at which time the state hopes to lay claim to 60 percent of the card’s value, based on a recent law aimed at out-of-state companies. Maine already had laws that applied to unclaimed property laws to gift card issued by in-state retailers, the treasurer said.
However, getting its hands on that money has not been easy. Although Maine’s treasurer wrote to more than 40 major retailers with stores in the state requesting unused gift card funds, the companies simply ignored the requests or refused to turn over the money. As a result, the matter has been referred to Maine’s attorney general.
Retailers’ lack of response is costing Maine some serious money. The Canadian Press writes: “The refusal of national firms to pay up has left a hole in the state budget. The Legislature included US$28.6 million from dormant gift cards in the budget for the two-year period that ends in mid-2009. Last month, a panel that projects state revenues said that figure won’t be met.”
Research and advisory firm TowerGroup reported that unused gift card value should decline to $7.8 billion in 2007 from $8 billion the previous year. Still, that’s a lot of money. With such a large pool of gift card funds at stake, jockeying between states and card issuers is likely to continue.
For more on rules governing gift cards in individual states, visit the National Conference of State Legislatures Web site.
To make sure you don’t lose the money on your gift cards, read “Free money: how to claim expired gift card funds.”