TRENTON – The state fired back today at American Express and other opponents of the gift card unspent funds law.
“The large card companies would have you believe that the state is ‘grabbing’ or ‘taxing’ gift cards. That is a total fabrication and nothing more than part of a misinformation campaign designed to protect giant card issuers’ anti-consumer business practices and unjustifiable profit-grabs from abandoned or forgotten gift cards,” the Treasury Department stated in a release it issued today.
Treasury’s response was prompted by a decision by American Express – a decision retailers fear could snowball – to pull gift cards from New Jersey stores rather than let the state claim unspent funds.
The law – passed in 2010 – allows the state to claim after two years any unspent card funds. In defense of the law, Treasury stated this prevents the card issuer from claiming such funds as a “windfall’’ profit.
“Unlike balances taken as extra ‘profit’ by an issuer, every penny the state holds in unused gift cards can be reclaimed by consumers – forever,” Treasury stated in its release.
“After all,” the Treasury statement said, “gift cards belong to consumers and unused balances are their money. They are not, and never should be, the property of the issuer. And if an unredeemed gift card balance is never claimed by a consumer, it is only appropriate that it be made available for the benefit of all New Jerseyans to prevent tax increases and service cutbacks.”
Opponents of the bill had said that one of their concerns was that this law was aimed in part at finding another source of general fund revenue.
One key opponent, the N.J. Retail Merchants Association, fears that today’s Treasury position statement might accelerate the departure of other companies’ gift card business.
NJRM President John Holub said today that “I believe that this could potentially cause other issuers who are on the fence about what to do, I’m fearful this could push them over the fence, and we’ll see many more issuers or retailers pull their business from New Jersey.
“I can’t think of a more anti-consumer, anti-retailer initiative,’’ he said, which he finds surprising coming from an administration that generally is perceived as business-friendly.
According to Holub, the most troublesome aspect of this law is a requirement that retailers collect the ZIP codes of purchasers.
“No other state requires retailers to collect ZIP codes,’’ Holub said, explaining that the state does not seem to understand that the computer infrastructure this requirement necessitates is “not an easy lift.’’
But Treasury disputes that notion.
“Many gift card issuers and merchants collect ZIP codes — and much more information — at the point of sale,” it said in its release. “Most cards are validated at the time of purchase by a checkout clerk. Adding ZIP code information is not a big lift.”
Another problem, as NJRM sees it, is that in many cases the consumer will be completely unaware unspent funds have been claimed by the state.
The state, however, maintains its law protects consumers.
“Gift card issuers have been “grabbing” windfall profits from consumers for years, and the 2010 law ends the practice,” Treasury stated.