It looks like the American Express Gift Card is no longer an option for consumers in New Jersey. According to NorthNewJersey.com, American Express began removing it's gift cards from store shelves several weeks ago and the last one was removed yesterday.
It's all the result of recent changes to New Jersey Gift Card Laws, which require merchants to hand over the value of unused gift cards to the State of New Jersey after two years. The law also requires merchants to collect the zip code of a gift card purchaser to help the state determine the location of the potentially abandoned property.
It's not surprising American Express is first to move on this front, the company already avoids Hawaii and Vermont when selling gift cards. If more merchants follow, it will certainly cause a stir.
Administrative Nightmare or Proof of Consumer Protection
Opponents of the new laws suggest collecting zip codes from buyers is an onerous task requiring expensive upgrades to their systems. Furthermore, selling gift cards at third party locations such as a grocery store makes compliance even more difficult to enforce for card issuers. As a result, they would prefer to avoid selling in the state altogether.
Proponents of the new law suggest American Expresses' willingness to pull out of the market entirely is proof the majority of the revenue generated by such gift card programs is the result of unused gift cards and reason why such laws are needed.
Either way, consumers are loosing out. However, one Assemblyman believes the new laws are protecting consumers. Assemblyman Declan J. O'Scanlon Jr. (R-Monmouth County), is quoted saying:
"New Jersey doesn’t steal people’s money...In fact it’s consumers we are protecting."
Mr. O'Scanlon was a sponsor of the new gift card laws and he's simply wrong. When unclaimed property laws are applied to gift cards it hardly helps consumers. Here are a few reasons why:
- Only a sliver of the money collected from unused gift cards will end up back in the consumer's hands. One article pegged the number at just 22 cents for every $1,000 seized. That's hardly a help to consumers.
- Gift cards are purchased and given to other people. Therefore, the location of the gift cardholder is often unknown. Many of the gift cards New Jersey collects will belong to gift cardholders who reside in another state.
- The state of New Jersey is essentially expiring the gift card after two years. While a consumer could get the money from the state, they won't be able to redeem the gift card with the merchant as it was intended.
I'm a proponent of protecting consumers when it comes to gift cards and if New Jersey were really serious about gift card consumer protection they would pass laws which prohibit expiration dates, fees and require merchants to offer cash back for gift cards which have been used at least once and have a balance of $5 or less.
At the very least, New Jersey should take a page from Texas Gift Card Law and exclude gift cards with no fees or expiration date from unclaimed property law.