On June 29, New Jersey Gov. Chris Christie signed into law Senate Bill 1928, which amends New Jersey’s 2010 gift card escheat law (N.J.S.A. 46:30B-42.1). The law generally requires issuers of gift cards to report and pay the unused balance of abandoned gift cards to the state. The two most important amendments to the law involve an extension to the abandonment period and increased data collection requirements for issuers.

With regard to the abandonment period, under the prior law, a gift card was presumed abandoned and issuers were required to submit payment to the state after two years of card inactivity. The amended law extends the abandonment period to five years of card inactivity.

With regard to data collection, beginning on July 29, 2016 an issuer will be required to obtain the name and address of a gift card purchaser, and, at a minimum, maintain a record of the zip code of the purchaser. Previously, an issuer merely needed to keep track of the address of the place where the gift card was purchased.

Other changes of the amended law:

  • the amended law distinguishes between “general purpose reloadable” cards (i.e., cards issued by a bank that can be used at multiple stores, can be reloaded, and are not marketed as a gift cards) and “stored value” cards (i.e., more traditional gift cards to be used at specific stores). For abandoned “general purpose reloadable” cards, issuers must pay after five years of inactivity the entire unused amount to the state. For abandoned “stored value” cards, issuers must pay after five years of inactivity 60 percent of the value of the unused amount
  • if the unused value of a gift card drops below $5, an issuer is now required to refund the balance in cash at the cardholder’s request
  • the amended law does not apply to gift cards donated or sold below face value for charitable purposes
  • the amended law does not allow an issuer to impose fees or charges on gift cards except for activation fees and replacement card fees for lost cards. Additionally, expiration dates are now prohibited for gift cards issued after December 1, 2012.

Pepper Points

The amended law’s five-year abandonment period resolves the discrepancy between the 2010 law’s two-year abandonment period and the federal Credit Card Accountability Responsibility and Disclosure Act of 2009 (15 U.S.C. 1693(l-1)(c))’s requirement that gift cards must stay valid for five years after issuance.

Although the amended law does not provide further guidance on procedures for data collection, we recommend that gift card issuers in New Jersey begin to think about implementing a system for keeping track of the zip codes of gift card purchasers. It is also likely, based on the fact that the law provides a four-year compliance window, that the New Jersey Department of Treasury will issue further guidance on the issue.

The amended law, although less burdensome with respect to the abandonment period, still puts a burden on gift card issuers to comply with the increased customer data collection provisions. In response to the 2010 law, certain gift card issuers stopped selling gift cards in New Jersey, which, in addition to lobbying efforts, influenced the passage of the amended law. Similarly, it is likely that lobbyists with ties to the gift card industry will once again attempt to influence further revisions to the amended law in order to eliminate the data collection provisions completely.