Unused Gift Cards Aren't Free Money For Stores

While the information in yesterday’s post, “Don’t Let Gift Cards Become Free Money For Stores” was good, the title was erroneous. Actually, depending on the state, unused gift cards may be classified as unclaimed property. The value is then turned over to the state in a process called “escheatment.” It would appear, however, that in some states, the stores do get to keep the money. This PDF gives a breakdown of how the laws generally apply state by state.

States that generally exclude gift cards/gift certificates as part of escheat laws:

Alabama
Arizona
Colorado (food)
Delaware (less than $5)
Florida
Idaho (with expiration date)
Illinois (without expiration)
Kansas
Kentucky (unsettled)
Maryland
Massachusetts
Minnesota (unsettled)
Mississippi (unsettled)
Missouri (unsettled)
Nebraska (unsettled)
New Hampshire (under $101)
New Jersey
New York (unsettled)
North Dakota
Ohio (unsettled)
Oregon
Pennsylvania (unsettled)
Tennessee (no expiration date or dormancy fees)
Texas (food)
Utah (under $25)
Vermont (unsettled)
Virginia (unsettled)
Wyoming (under $100)

States that do specifically include gift cards/gift certificates as part of escheat laws:

Alaska
Arkansas
California
Connecticut
District of Columbia
Georgia
Hawaii
Indiana
Iowa (unsettled)
Louisiana
Maine
Michigan
Montana
Nevada
New Mexico
North Carolina
Oklahoma
Rhode Island
South Carolina
South Dakota
Washington
West Virginia
Wisconsin

(Source: National Restaurant Association)

If, as a recipienthttp://www.restaurant.org/government/state/giftcards/giftcards_200309_states.pdf, your gift card has escheated to the state, you can file a claim with your state comptroller’s office to have it returned.

In general, though, you’re best off spending a gift card as quickly possible. Certain cards have “maintenance fees” and other fees that can devalue the card over time.

PREVIOUSLY: Don’t Let Gift Cards Become Free Money For Stores
(Photo: her wings)

Comments

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  1. HeyThereKiller says:

    Escheating you out of your money…

  2. FREAKHEAD says:

    I also remember (in NE anyway) when I was in retail management, the accountants had to list sold but unused gift cards as a liability.

  3. HunterJoules says:

    To tell you the truth, it’s hard for me to get angry at companies who turn unused gift cards into windfalls. I think consumers should solve the problem themselves simply by giving people cash instead of gift cards.

  4. Sudonum says:

    Can’t spell “Escheatment” without c-h-e-a-t

  5. jeffjohnvol says:

    Ha! Thats what I thought! I think I was the first to post that. Okay, off my high horse.

  6. bobpence says:

    Solution: Charge customers a maintenance fee until the unused gift card is an empty gift card!

  7. ptkdude says:

    @FREAKHEAD: This isn’t a state thing, it’s a GAAP thing. Money taken in when selling gift cards is unearned revenue (a liability account), and must be listed as such in financial records, just like revenue for magazine subscriptions.

  8. FREAKHEAD says:

    @ptkdude: I appreciate the clarification. I just remember overhearing something about that and the article kicked up an old dusty memory.

  9. ExtraCelestial says:

    ok i heart u guys, i really really do, but this is the third gift card post in two days. i understand that this post was a clarification of another, but perhaps you could space them out a bit?

  10. ptkdude says:

    @FREAKHEAD: Hey, I learned at lease one thing in school!

  11. FREAKHEAD says:

    @ptkdude: I learned how to open beer bottles on the edge of my kitchen counter. Does that count? ;)

  12. morganlh85 says:

    Cards aren’t turned over to unclaimed property until after a year or a few years though, right? So doesn’t that mean the store gets to earn interest (aka free money) on your gift card money for however long until they are required to turn it over?

  13. mac-phisto says:

    actually, connecticut amended their gift card legislation in 2005 to specifically exclude gift cards from state escheatment rules PA 05-189.

    [www.giftcardlaw.com]

  14. bigsss says:

    I agree that it’s not a state thing, it’s a GAAP thing. Money taken in when selling gift cards or store credit cards is unearned revenue (a liability account)and is not a wind fall for companies. Actually it is a detriment to companies. There is not windfall profit made on interest as the company has to accrue or set aside from sales until the cards are cashed in. That is why now on some gift cards, some companies will apply a service charge or maintenance fee against the card balance if the card is inactive for a certain period of time, like a year or so. So it makes sense to use gift cards and store credit cards A S A P.