On Friday, June 29, 2012, New Jersey Governor Christie signed SB 1928 into law, a bill that changes the disputed NJ unclaimed property-related gift card statutory provisions enacted in summer 2010, and also modifies NJ stored value card provisions in New Jersey’s consumer protection laws. Most notable about the bill is the increase in dormancy period from 2 to 5 years for gift cards issued after July 1, 2010 and the reduction in the amount that must be escheated to 60% of the unredeemed balance for cards other than general-purpose reloadable cards.
Further, the controversial zip code/collection requirement remains in the statute but is not enforceable until the 49th month after the bill’s effective date of June 29, 2012. Promotional cards for which there is no direct monetary consideration paid by the owner are exempted as are cards donated or sold below face value to a nonprofit, charitable, or educational organization and cards redeemable for admission to events or venues and/or for goods or services in connection with such admission.
In addition, New Jersey consumer protection law was amended to require that beginning September 1, 2012, cards with a balance of less than $5 must be redeemed in cash by the merchant at the cardholder’s request. Also, the law now expressly prohibits expiration dates or fees (other than issuance, replacement or reload fees) on cards sold on or after December 1, 2012.
Businesses should be vigilant about the interpretation and implementation of the SB 1928 statutory changes by state unclaimed property officials. The zip code/collection requirement, while not yet enforceable, may prove to be a complex and expensive endeavor for the business community. Further, while the questionable place of purchase presumption placed in the statute in 2010 was deleted in the final, enacted version of SB 1928 , it remains to be seen if New Jersey officials will use “zip code” information in the future to argue that 60% of the value of unused and dormant gift cards should be escheated to their state.
To review the legislation, click here.