You can’t help knowing that many states in this country are verging on bankruptcy and are searching relentlessly for creative ways to offset their red ink. What you might not know is that there are rules on many states’ books that govern lost or abandoned property and that there is a legal precedent going back to the nineteen sixties that considers gift cards with a balance as abandoned property after a certain period of time. It’s a nightmare in the making for any business that offers gift cards to customers.
In addition, the federal government has issued rules for gift cards that went into effect recently. Briefly they state that a gift card must not expire in less than five years and that merchants cannot charges fees or reduce the amount on the card for lack of use.
The thing you’re not told is that any balance owing at the end of the five year period must be paid to the state, although there are also rules in place to determine which state. It might be the state where the purchaser of the gift card lives or it might be state where the merchant’s business was incorporated. And if the state involved has stricter rules than the federal guidelines, the merchant must follow those rules. Some states want the money after three years.
This affects not only the merchant’s bottom line but also the customer’s. In many cases, the merchant is forced to hand over any balance on a gift card to the state, and the customer might not even know it. Imagine everyone’s frustration when a customer finds a long lost gift card and tries to redeem it. In an effort to offer sterling customer service, a merchant could honor the gift card and lose out twice: once to the government and once again to keep a customer.
I’m not sure what can be done about this, other than that merchants should mount a campaign alerting their customers that it’s really important to use gift cards in a timely fashion. It’s really not so much about the merchant’s bottom line either, as it is about various governments eyeing ways to make money from uninformed businesses and their clientele. After all, do you want any money left on your gift card to pay for highway reconstruction or water purification or environmental research without being aware of it?
You might think that the buck ninety-eight on that card isn’t important, but the gift card industry is a mega-billion dollar one. Surely you can see why, if everyone left a couple bucks on a gift card, the various governmental agencies are salivating.