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Gift Card Law Triggers Concerns for Retail Industry [POLL]

Three major gift card companies already decided not to comply with a law that allows New Jersey to claim the value of unredeemed gift cards after two years. The companies’ announcements have triggered widespread fear that the controversial law could pose serious concerns for consumers and the retail industry.

Gift Cards
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American Express gift cards have already been pulled from the shelves at malls and grocery stores. Blackhawk Network, which hosts 175 gift card brands, as well as third-party provider Incomm, announced they would cease New Jersey business in June, unless the law is overturned.

“We’re fearful that this could be just the tip of the iceberg,” said John Holub, President of the New Jersey Retail Merchants Association. “That many more retailers and gift card issuers could also decide that they can no longer operate in the state.”

Holub said there’s even a distinct possibility that some retailers in New Jersey will pull their own gift cards from their own stores. He said the cost of complying with the law is too great.

Consumers would still be able to redeem a gift card after two years, but if the state already claimed the value, businesses could have to experience an administrative obstacle course to be reimbursed.

Retailers would need to record a purchaser’s zip code, which Holub described as an “administrative nightmare.”

A federal judge lifted an injunction last month of the collection of zip codes. Merchants have been left waiting for guidance from the Treasurer’s Office on how the gift card law will be implemented.

Holub said a drop in the availability of gift cards is going to have a significant impact on retailers. Less gift cards sold means less opportunities for consumers to come into the store.

He adds, “Most times when somebody does come in and use a gift card, they will spend a couple extra dollars more than the value of the gift card.” Known as a “lift,” the extra spending is a significant part of the gift card business.

A bill sponsored by Assembly Democratic lawmakers Pat Diegnan, Paul Moriarty and Gordon Johnson to reverse the Christie administration’s law has been approved by the full Assembly and awaits action in the State Senate.

 

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