N.J. Assembly passes escheatment rollback bill

On March 15, 2012, the New Jersey Assembly passed a bill that would reverse a controversial state law that governs abandoned property, such as balances on unused gift cards. Among the provisions of New Jersey State Assembly bill A1871 is the removal of certain types of stored-value (gift) cards from the list of instruments covered under New Jersey's abandoned property provisions.

The bill, sponsored by Democratic Assemblymen Patrick J. Diegnan Jr., Paul D. Moriarty and Gordon M. Johnson, was approved on a 48 to 27 vote, with four legislators abstaining. Not only would the bill remove gift cards from the ranks of escheatable property, but it would restore the longer abandonment periods (before the state could claim such funds) on other types of property, such as travelers checks and money orders.

New Jersey updated its abandoned property provisions in June 2010, when A3002 was signed into law by Republican Governor Chris Christie. The law included, for the first time, the leftover balances on unused gift cards as among the types of abandoned property that New Jersey could seize for state coffers. It was estimated that the Garden State could collect up to $55 million annually in unused gift card funds.

But gift card providers and merchants mounted legal challenges to the new law, arguing among other things that the reporting requirements on gift card purchases stipulated by the law would be too time consuming and costly to implement, and would result in providers and retailers eliminating gift card programs in New Jersey.

Diegnan said the updated law caused "a significant amount of uncertainty for consumers and businesses alike." Johnson added, "We should be promoting businesses and protecting consumers, not going after them, especially in this difficult economy." Moriarty characterized the bill as restoring "sanity to the system" and protecting consumers' rights to unclaimed property.

The U.K.-based Global Prepaid Exchange reported that a social media campaign called "Gift Card Users Unite" has arisen on Facebook. The goal of the campaign is to inform New Jersey citizens of the controversy and push for a more consumer and business friendly solution to the issue.

The bill now moves to the New Jersey Senate.

The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.