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THE BERNARDS-RIDGE CONNECTION
NOVEMBER 2012
D
I
S
ABATO
&
B
OUCKENOOGHE LLC
-
A
TTORNEYS AT
L
AW
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4
H
ILLTOP
R
OAD
M
ENDHAM
,
N
EW
J
ERSEY
07945
973.813.2525
www.disabatolaw.com
THE GIFT THAT MAY NOT KEEP ON GIVING
By: David J. DiSabato, Esq., DiSabato & Bouckenooghe LLC
Gift cards are big business, and earlier this
summer, New Jersey finally solved the prob-
lem of what to do with your unused ones.
Way back in 2010, New Jersey lawmakers
saw a huge opportunity to increase State
revenues by changing the law so that the
value of unused gift cards would escheat to
the State after five years.
There is huge money in unused gift cards.
Industry experts estimate that United States
merchants sell almost $100 billion worth of
store cards annually. Of that, six percent, or
$6 billion of gift card balances go unspent.
In New Jersey alone, over $4 billion worth of
gift cards are sold each year and almost
$114 million of that is never redeemed,
instead sitting forgotten at the bottom of
countless purses and junk drawers. Those
unspent balances typically end up back in
the bottom line of the merchants as the
cards expire or are deemed unused.
So, needless to say, the business communi-
ty was very unhappy with the result of New
Jersey’s proposal, which would take the
enormous revenue from unused gift cards
out of retailers’ pockets and put it into New
Jersey’s coffers instead. Major gift card
players, such as American Express, Black-
hawk Network and InComm, all threatened
to stop selling gift cards in New Jersey after
the law was announced.
After nearly two years of legal wrangling
and political lobbying, a compromise of
sorts was finally signed into law in June.
The first part of the law went into effect in
September. Here are the three most impor-
tant things you now need to know about
your gift card:
First, as of September 1, 2012, you’re enti-
tled to get cash back for gift card balances
of less than $5. No longer will you be stuck
with that odd change left on your gift card.
The new law requires the issuing merchant
to give you cash for the balance now, pro-
vided it’s less than $5. Keep an eye on this
“
cash back” provision. The law doesn’t
require merchants to disclose this option to
you, and many merchants may be slow to
catch on. A few years ago, Starbucks was
fined $225,000 for failing to comply with a
similar law in California.
Second, starting on December 1, 2012 –
just in time for the holidays – no gift cards
sold can be subject to post-purchase fees or
expiration dates. This means no more
monthly service fees, dormancy fees or
unexpected expirations.
Third, it ain’t over. In mid-October, New Jer-
sey petitioned the United States Supreme
Court to hear a case that could change it
all. We should know later this Fall if the
high Court will take the case, but if they
do, New Jersey’s gift card law could be
rewritten yet again.
Who knew that gift cards were so compli-
cated? A gift card should be worth what
the purchaser paid for it. Period. But with
millions of dollars in unclaimed gift card
value up for grabs, its not surprising that
the State and retailers are butting heads.
Just remember, if your dear old Grand-
mother puts a gift card in your stocking this
Holiday season, do yourself a favor and go
redeem it before you forget about it. It’s
good for the economy and your junk draw-
er sure won’t miss it! (Oh, and don’t forget
to send Granny a thank you note!)
DiSabato & Bouckenooghe LLC is a con-
sumer protection law firm located in Mend-
ham, New Jersey. For questions or to learn
more, go to www.disabatolaw.com.
gift
card
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