Over the years, states have looked at many different ways to close budget gaps. During the recession, New Jersey went after gift card breakage, the value remaining on unused gift cards. In 2010, the State passed a law that brought much criticism from retailers, banks and unclaimed property professionals. Yesterday, Governor Christie officially ended this when he signed S2235 into law, eliminating the last of the 2010 law by removing the requirement that retailers collect name and address information from purchasers of a gift card.
The 2010 law had many problems from the beginning. The law applied a presumption that the owner was the purchaser, which is often not the case for gift cards as they are intended to be gifted to another party. The law required that the issuer or retailer acquire the name and address of the purchaser and if the purchaser refused, then the store's location would be presumed. The state would then collect the unused portion of the gift cards after two years of dormancy. This place of purchase presumption was in direct violation of federal common law, while the shortened dormancy period was in conflict with the Federal CARD Act which required no less than a five year expiration. The law also applied retroactively to gift cards that had already been sold.
In November 2010, a New Jersey District Court granted a preliminary injunction against the state, to stop enforcement of the law pending additional hearings and decisions by the court. The preliminary injunction was appealed and the Third Circuit affirmed in January 2012. The Court said that New Jersey could not apply the law retroactively to previously sold gift cards and the place of purchase presumption was invalid.
In July 2012, New Jersey amended the law with SB 1928, which changed the dormancy period to five years. In addition, it delayed the data collection requirements for five years and allowed retailers to keep 40% of the breakage. Expiration dates and most fees were prohibited.