Legislative Update: SB 2235 passed the Senate unanimously on June 30, 2014. The bill was assigned to the Assembly Consumer Affairs Committee on July 11, 2014.
New Jersey has a new bill pending that would eliminate data collection requirements for gift cards sold within the state. SB 2235 would also eliminate the associated record retention requirements. Other requirements, including the new five year dormancy period, would remain. Gift card issuers hope that the legislature acts swiftly on this bill so that they will not have to continue development on costly systems to implement the data collection requirement, currently to become effective in July 2016.
By repealing the data collection requirements, New Jersey will no longer be an outlier among states with respect to its treatment of gift cards.
The bill was sent to the Senate Budget and Appropriations Committee.
History of Gift Cards in New Jersey
This long and storied road began in 2010 when New Jersey passed a law intended to speed up the collection of unused gift cards in order to help fill budget gaps. The New Jersey law required stores to collect the purchaser's name and address, or at a minimum the zip code, at the time of sale of a gift card. In the absence of a purchaser provided zip code, the store's location was to be used. After two years of dormancy, the unused portion of the gift cards sold to New Jersey residents would to be escheated to New Jersey. The law applied retroactively to cards sold in New Jersey. (For a discussion on how these provisions affect holders, please visit What's the Hub Bub All About Anyways?)
Quickly, retailers filed lawsuits against the new law. In November 2010, the District Court enjoined the retroactive portion of the statute, as well as the place-of-purchase presumption (using the store's location) under the statute. The other provisions, including the data collection requirements, of the law remained. A little over a year later, the Third Circuit affirmed the District Court's grant of a preliminary injunction. In October 2012, the U.S. Supreme Court denied cert in the case.
While the litigation was pending, retailers and other gift card issuers opened a second front of attack within the state legislature. The issuers were able to successfully lobby for the passage of SB 1928, passed in the summer of 2012. SB 1928 changed the dormancy period to five years, consistent with the CARD Act of 2009, allowed issuers to retain 40% of the remaining balances, and delayed address collection for four years. Address collection is currently set to become effective July 2016. In the wake of SB 1928, several major gift card issuers changed courses, deciding to continue to offer cards within the New Jersey market after previously announcing that they would withdraw.