New Jersey, American Express Squabble Over Gift-Card Law
April 04 2012 - 5:31PM
Dow Jones News
The state of New Jersey's treasury department fired back at
American Express Co. (AXP) and other critics of a new gift-card law
after the credit-card company said it was pulling its gift cards
from the state's retail stores.
American Express said earlier this week it was no longer selling
gift cards through New Jersey retailers because of a state law that
requires merchants to collect ZIP codes from card buyers.
The requirement, which has yet to take effect, is part of a law
passed in 2010 that allows the state to reclaim unused gift-card
balances after the cards have been dormant for two years. Under
guidelines yet to be issued, retailers would be required to collect
ZIP codes and potentially other information, such as addresses, to
track cards purchased in the state.
"Because American Express sells its gift cards through
third-party independent retailers, we are not able to ensure
compliance with that part of the law," a spokeswoman for American
Express said. The company's gift cards are still available from its
own website and can still be used at New Jersey stores that accept
American Express.
The New Jersey treasury department said Wednesday that it felt
the "need to set the record straight" following American Express's
decision and criticism from other retailers and trade groups. The
agency said the law was intended to help consumers by preventing
sellers of gift cards from charging inactivity fees. Once a card
has been inactive for two years, the law allows the state to take
unused balances to hold for consumers.
"Unlike balances taken as extra 'profit' by an issuer, every
penny the state holds in unused gift cards can be reclaimed by
consumers--forever," the agency said Wednesday. "And the value of
the card is available to the customer--with interest--forever."
U.S. merchants sell an estimated $100 billion of "stored value"
cards each year, with about $6 billion going unspent annually, the
agency said. Collecting ZIP codes is "not a big lift" for
retailers, it said, adding that businesses, including Modell's
Sporting Goods and Red Robin Gourmet Burgers Inc. (RRGB)
restaurants, already collect ZIP codes from gift-card
purchasers.
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214;
andrew.r.johnson@dowjones.com
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