New Jersey Sued over New Gift Card Law

Law Suit Filed Seeking Preliminary Injunction

Three suits have been filed by the New Jersey Food Council, the New Jersey Retailers Association and American Express Travel Related Services Co. seeking a preliminary injunction against enforcement of the New Jersey unclaimed property provisions for gift cards that were enacted at the end of June. The suits were filed in federal court in Trenton, N.J., and allege that the recent revisions to the Uniform Unclaimed Property Act are pre-empted by the Texas v. New Jersey priority rules and further violate the U.S. Constitution's Taking, Commerce, Contract and Due Process Clauses.

The New Jersey legislation that is being challenged took effect July 1st and retroactively provides that unredeemed balances on gift cards (which were not previously covered by the Unclaimed Property Act) are presumed abandoned after two years. Unredeemed balances must be reported to New Jersey based on the place of purchase of the gift card if the issuer does not have a last known address (or at least a zip code) of the purchaser or owner of the gift card. In addition, the dormancy period for travelers' checks was shortened from 15 years to three years.

The position of the New Jersey State Treasurer’s Office has kept changing as to when issuers of gift cards will first be required to collect last known address information for purchasers of gift cards, how far back the State Treasurer intends to claim old gift card balances on the books of issuers, and when the State Treasurer plans to begin applying the controversial "place of purchase” priority rule. These shifting administrative positions are a subject of these lawsuits.

Below is a link from law.com of a recent article on the NJ lawsuits.

New Jersey Law Suit