On June 29, 2012, New Jersey Governor Chris Christie signed into law legislation amending New Jersey’s unclaimed property law relating to the escheat of abandoned stored value cards (SVCs) to the state.
Under the original unclaimed property law, which took effect July 1, 2010, SVCs that were inactive for two years were presumed abandoned, and New Jersey required that the monetary value associated with the inactive cards be escheated to the state. Additionally, SVC issuers were required to (a) “obtain” the name and address of each card owner or purchaser, and (b) “at a minimum, maintain a record of the zip code of the owner or purchaser” of each SVC. New Jersey posited in a statement accompanying an earlier version of the final bill that the law’s purpose was “to protect New Jersey consumers from certain commercial dormancy fee practices and modernize the State’s unclaimed property laws.” New Jersey also posited that the law increased the likelihood of reuniting consumers with their escheated funds and permitted New Jersey to establish jurisdiction over the escheated property. See N.J. Retail Merchs. Ass'n v. Sidamon-Eristoff, 669 F.3d 374, 388 (3d Cir. 2012).
The 2012 amendment comes in response to a flurry of lawsuits filed by SVC issuers following the 2010 law’s effective date. Beginning in September 2010, the New Jersey Retail Merchants Association and other SVC issuers filed separate complaints in the United States District Court for the District of New Jersey challenging the law’s constitutionality. The District Court – and, ultimately, the Third Circuit (see above) – declined to enjoin the law’s requirement that SVC issuers collect personally identifiable information from card owners and purchasers, finding that requiring such collection was constitutional and served the consumer protection purpose of providing New Jersey with a better opportunity to “reunite the owner with the abandoned SVC funds.” N.J. Retail Merchs. Ass'n, 669 F.3d at 397-98.
The New Jersey legislature, it appears, has attempted to address some of the SVC issuers’ concerns by modifying the law. For example, under the amended law, SVCs are presumed abandoned after five years of inactivity (as opposed to two years), and SVC issuers have a forty-eight month grace period before they are required to collect the names, addresses, and zip codes of SVC owners or purchasers. It should be noted that pursuant to a Treasury Announcement published by New Jersey’s Office of the State Treasurer on November 24, 2010, it was clarified that issuers that do not collect purchasers’ names and addresses in the normal course of business or during a card-registration process are exempted from collecting purchasers’ names and addresses under the law, but they are still required to collect and maintain purchasers’ zip codes.
Adding to SVC issuers’ angst is the potential conflict between the unclaimed property law and a separate New Jersey law which protects the personal information of credit card holders (N.J. Stat. § 56:11-17 (2012)). That law makes it unlawful for any person to require the disclosure of any personal identification information from a credit card holder that is not required to complete the transaction as a condition of allowing the card holder to use the credit card to complete the transaction. While we await the resolution of this potential conflict, courts may rule that no conflict exists: § 56:11-17 only addresses credit card use, but the state’s unclaimed property law makes no distinction between payment methods (and, therefore, doesn’t condition the use of a credit card on the collection of personal information).
The result of New Jersey’s amended unclaimed property law is this: whether one is a SVC issuer required by law to collect certain personally identifiable information or an owner or purchaser of an SVC, the clock is ticking… albeit, now, just a little more slowly.