New Jersey modified its unclaimed property laws to adjust the time periods for presumptions of abandonment, limit issuer imposed dormancy fees, and provide for related administration of certain unclaimed property. The new law extends the state’s unclaimed property rules to “stored value cards” – more commonly known as gift cards, gift certificates and similar instruments. The new law protects New Jersey consumers from certain commercial dormancy fee practices and modernize the State’s unclaimed property laws. The changes are effective as of July 1, 2010. See Public Law 2010, Chapter 25.
The new law has raised a number of technical and policy concerns. Chief among the concerns is the constitutionality of the provision requiring companies headquartered outside of New Jersey to turnover to New Jersey the value of stored value cards held by persons whose residence is unknown.
Presumptions of Abandonment
The new law provides the following presumptions of abandonment:
Adjusts the period of time which triggers abandonment for travelers checks from 15 to 3 years;
Adjusts the period of time which triggers abandonment for money orders from 7 to 3 years; and
Creates a 2 year trigger for abandonment of stored value cards. The bill’s definition of stored value cards, includes, but is not limited to, paper gift certificates, gift cards and rebate cards.
Stored Value Cards
The new law requires stored value card issuers to obtain the name and address of purchasers and to maintain, at a minimum, a record of the zip code of the purchaser. In instances where an issuer does not have the name and address of a purchaser, the address of the purchaser shall assume the address of the place where the stored value card is purchased, if that place is located in New Jersey. These provisions are designed to modernize the State’s unclaimed property processes relative to other states and enhance New Jersey’s capacity to protect its residents’ stored value cards from being subject to other state’s escheatment processes.
Stored value cards issued under a promotional program, customer loyalty program, charitable program or by a business selling $250,000 or less of stored value cards in the prior year are exempted from the stored value card provisions of the new law.
The State Treasurer is authorized to grant an exemption from the provisions concerning stored value cards for a business or class of businesses that demonstrate good cause. In determining whether to exercise the discretion to grant an exemption, the State Treasurer may consider relevant factors including the amount of stored value card transactions processed, the technology in place, whether or not stored value cards issued contain a microprocessor chip, magnetic strip, or other means designed to trace and capture information about place and date of purchase, and such other factors as the State Treasurer shall deem relevant.
Only stored value cards subject to the consumer protections provided under P.L.2002, c.14 (C.56:8-110) are exempted from from the unclaimed property provisions of the new law.
Dormancy Fees Restricted
The new law also limits the imposition of dormancy fees. The imposition of dormancy fees on travelers checks or money orders in the first 12 months after issuance are precluded and and permissible dormancy fees limited to $2 per month. Also precluded is the imposition of dormancy fees on stored value cards, credit balances, overpayments, security deposits, unused tickets, refunds, credit memoranda and similar instruments.
The new law was effective July 1, 2010 and applies to stored value cards, travelers checks, money orders and certain similar instruments outstanding on and after July 1, 2010, including, but not limited to, those issued before July 1, 2010.
Kulzer & DiPadova helps its clients and their accounting and financial professionals determine and comply with their obligations under the New Jersey unclaimed property laws.