American Express Pulls Gift Cards From New Jersey Stores

A new regulation in New Jersey will require sellers of gift cards to record the ZIP code of everyone who buys a card, because the state thinks a revision to its unclaimed property laws allow it to claim the value of any unredeemed gift cards after two years. So rather than deal with all the possible hassles involved with this change, American Express has simply pulled all its gift cards from retail locations in the Garden State.

When the law was first signed two years ago, American Express had been among those suing the state over the ZIP code requirement. A temporary injunction against collecting the address info had been put in place, but when that injunction was lifted, AmEx decided it was time to remove the cards because it could not risk the liabilities involved if the third-party seller did not comply with new regulations.

“Retailers and gift card issuers like American Express have had serious concerns about the escheat law since it was passed nearly two years ago,” the president of the NJ Retail Merchants Association tells the AP. “I fear many retailers are likely to follow American Express’s lead because the legal risk, technological burden and steep cost of complying is simply too great.”

The legislators in New Jersey were so confident when the law was signed that they actually booked $79 million of projected revenue into the state’s 2011 budget. Since the lawsuit is still being litigated, the state is waiting to book any projected revenue from unredeemed gift cards.

Some NJ lawmakers are working on legislation that would alter or reverse the 2010 law.

American Express pulls gift cards from NJ stores, citing new wrinkle in law [WashingtonPost.com]

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  1. Lethe says:

    I’ve never heard of that law. Seem’s pretty scummy. In what possible way can they justify stealing the money from people who haven’t gotten around to claiming them?

    • Hi_Hello says:

      what I don’t get is how do they determine they should get the money?

      If I bought a american express card in NJ and give it to someone who lives in PA. And the person never used the money…do PA get the money or NJ?

      There is no way to know that it went to PA…

      • soj4life says:

        It was purchased in NJ, that is all that matters. It is the same why with banking accounts, it matters where you opened the account, not where you live. Escheat laws cover some weird things, even before this. Money orders, cashiers checks, and travelers checks were covered before, and amex gift cards really are just like their travelers checks except easier to use. For stores to complain that they would not be able to get this data is just hilarious. How many times do they ask for your zip code when you just buy a shirt or candy already.

        • KennyS says:

          “I don’t have a zip code”.

        • Doubting thomas says:

          There is a huge difference between requesting a zip code and requiring one. The stores that request zip codes for marketing purpose do not lose anything when a customer declines to give one or gives a fake one. When big brother requires you to collect the zip code there are financial penalties for non-compliance that is essentially out of the shopkeepers control and certainly well outside Amex’s control.

    • AcctbyDay says:

      Hence why it is labled “escheat” hehe. It’s a law to cheat you outta your stuff.

    • rpm773 says:

      If I remember correctly, it was “justified” by the idea that it benefited consumers…Instead of the funds going back to the dirty vendors they were instead gobbled up by the state, thereby obviating the need to raise taxes in the future.

      Of course, many of these states were already so deep in the red ink that the funds go to pay off debts and obligations made years ago, and taxes will be raised in the future anyway.

      You have to be pretty creative in the sculpting of bullshit to be a legislator.

    • impatientgirl says:

      That has got to be one of ,if not the most, blatantly sleazy laws I’ve heard of in a long time.

  2. Robofish says:

    So the state gets greedy, and the company pulls the product in question. Sounds like the way things are playing out across the US. *insert grumbly comment about gov needing to learn to handle their budget*

  3. Hi_Hello says:

    spending money they don’t even have yet…

  4. sparc says:

    The biggest scam is that it isn’t being used to return the funds to the customer. It’s for New Jersey to take possession of the gift card money themselves and go on a spending spree.

  5. YouDidWhatNow? says:

    That is exactly what AmEx…and everyone else…should do.

    Just like when Amazon pulled that warehouse out of TX. If you don’t like the local laws, move. I applaud AmEx’s action and encourage others to do the same, and then perhaps the state will reverse their decision.

    Although as noted voluminously on this website, gift cards are a poor substitute for cash.

    • soj4life says:

      Escheat laws already cover travelers checks in NJ, amex gift cards are basically the electronic version of that product. Also, I doubt that amex sells many gift cards in the state because there are so many others options available to customers that are free to purchase.

      As for amazon leaving texas, they did not want to pay their tax bill; we really should not be applauding company that are refusing to pay $269 million in back taxes.

  6. aleck says:

    The bright new Republican star Governor
    – takes money from its owners just because they don’t use it for two years
    – drives a retailer out of the state

    Next step. If you have an account with a bank that you have not used for two years, all that money goes to the state.

    That’s some quality Republican values.

    • dolemite says:

      But…but…small government…morals…values…bibles…guns….real ‘mericans…

    • Cosmo_Kramer says:

      In any other state the retailer would just keep the money after two years (if it even took that long for the fees to drain the card).

      • Stickdude says:

        Not California – gift cards never expire here – nor are vendors allowed to charge fees that eventually drain the card of all value.

    • EnergyStarr says:

      ah……oversimplification.

  7. catastrophegirl chooses not to fly says:

    next thing you know the state will claim unused gifts. although if the state wants to come pick up the ugly sweater and the weird placemats that i’ve been gifted and never use, then sell them to make up revenue it’s losing by not raising taxes, i could go for that.

  8. RiverStyX says:

    Again serving up reminders why I got the hell out of that state over 10 years ago and never looked back. They don’t need $79 million, they need a really big toilet to flush their entire state down. Maybe someone can hire the japanese to restart Unit 731 and use the garden state as a testing ground.

  9. donjumpsuit says:

    It seems in the case the consumer wins, as “Default”. The state saw private business profiting from sleepy consumer practices, and decided it wanted the money, so it changed legislation, which lead to the business to discontinue the product because its now a money losing product (fees and taxes and such were offset with unclaimed expired balances). Both basically took their ball away from the game and went home. Now consumers will have to resort back to paying with card or cash.

  10. KyBash says:

    Consider the choices:

    1) The money sits on the gift card until the monthly fees eat it up, or the company retroactively applies an expiration date, or one of the other thousand-odd ways companies use to keep the money for themselves.

    2) After two years, the money goes into the state’s unclaimed property where the purchaser can get it at any time, where it earns interest for the state, and where it never gets eaten away by fees.

    • rmorin says:

      Your second option is completely incorrect; you don’t get the money back, ever.

      • KyBash says:

        “The Unclaimed Property Administration (UPA) recovers and records abandoned or lost intangible and tangible property. The UPA‚Äôs goal is to return this property to the rightful owner and/or heirs. NJ Unclaimed Property Statute states that property owners never relinquish the right to this property and that the UPA acts as a custodian until the property is returned.”

        • libgeek says:

          Sure looks like this law is separate from the law you cite, since the great minds in Trenton actually budgeted another $79 million in anticipation of what they’d make on it. Anyway, how could they possibly return the money with just a zip code?

          • MyTQuinn says:

            I find it hard to believe there’s any intent to return the money. The ZIP code is probably required to establish that the “owner” of the card resides in NJ and falls under the jurisdiction of the state.

            Regardless, this really ticked me off last week when I was trying to buy a card, and after finding only empty spaces at 6-8 stores, my bank finally told me they had been destroyed a day earlier, after being made unavailable for sale a week before that.

    • caffeyw says:

      There is no fees other then at purchase on amex cards. Federal law changed on this about two years ago. Also the card must be good for at least 7 years before it expires. This to me would mean it’d be 9 yrs before NJ could claim it but on that part I could be wrong.

  11. Blueskylaw says:

    Am I the only one who thought it said:
    American Express Pulls Gift Cards From Jersey Shore?

  12. soj4life says:

    I doubt this is going to effect many customers, amex charges like $2.49 or $5.00 per card. When you can get gift cards at so many different locations without a purchase fee, amex really was in a losing position anyway.

  13. brinks says:

    This will be a huge burden on retailers. Are they supposed to record this info on paper and hopefully remember to do so and then file it away somewhere? Or do they need to spend hundreds of thousands of dollars on computer upgrades? How is this going to be tracked? By the retailer, the card company, or the state? I don’t blame AmEx, and I hope other issuers follow suit.

  14. rmorin says:

    So American Express (and all gift card issuers) engaged in a crummy practice collecting remaining balances on expiring gift cards.

    The state of New Jersey sees it, and says “Instead we are going to engage in the the crummy practice of collecting balances on expired cards”

    It’s like the state government decided that American Express had a good scam going and they want in on it, it’s baffling.

  15. xamarshahx says:

    First of all, who buys these overpriced Amex gift cards that rape you with fees??
    Second, will NJ stop passing idiotic laws??

  16. hahatanka says:

    Most gift cards have an expiration date. Many companies like AMC have a separate Arizona company for just gift cards. Under AZ law, when the cards expire, AMC gets the money.

    As for NJ, they have no searchable database for unclaimed property. You have to go to Missingmoney.com. Strange they don’t list everything. One search showed 2 items on Missingmoney, 5 items on the Missouri state site. Even when you find money, the hoops you have to go to prove it’s your money makes getting some of it impossible.

  17. El_Red says:

    WTF? And Americans complain that Canada is socialist? This is a plain money grab, and a privacy invasion.

    While Canadian provinces are in process of removing all expiry dates on gift cards, USA’s states are stealing money from its citizens.

  18. david.c says:

    This is the type of BS that comes from politicians forgetting it’s NOT THEIR MONEY in the first place. They need to start figuring out ways to “cut” our taxes and give us back more of our monies.

    This is also the reason why we generally don’t give gift cards … and if we get gift cards we try to use them immediately, if not sooner. The whole “gift card” thing has pretty much been a scam by everyone from the start.

    What happened to giving cash? Oh yea … it’s not PC to just give cash cause if you give a gift card you at least had to go out of your way to acquire it … kind of like how you have to go out of your way to get aids. yes … I went there cause gift cards truly are a PAIN IN THE REAR.

  19. baristabrawl says:

    Have you ever been to Jersey? And good for AMEX! I love stories like this.

  20. kombi says:

    I had this happen to me in California. If you dont use a financial account for 2 or 3 years they seize it. Stocks, saving accounts money markets. They see it as abandoned property. And you have to jump thru hoops to get it back and you dont get the full amount. In my case it was a hand full of shares in Lucent Tech I purchased while I worked for them. At the time they would match. You buy 1 and they give you one. I knew guys that where going to retire soon, because they had a couple mil in stock. Then the crash.

    If this tells you anything. Send in the voting proxies, move items. Take a buck out once in a while or legal states can take it.

  21. AllanG54 says:

    This is nearly as bad as the law they wanted to pass in New York City where all the bottle deposit money collected that wasn’t redeemed had to be turned over to the city. As if the stores could possibly keep track of that amount as they’re required to redeem any bottles as long as they sell that product no matter where it was originally purchased. Theoretically a store could redeem more in bottles than in deposits that they’ve collected if they take in more than they’ve sold and in many areas they do as people go “bottle fishing” in garbage cans, recycling bins, etc. to supplement their purchasing power. This underground economy keeps a lot of people from not being able to eat much at all.