With the nation just having celebrated its 236th birthday, you probably still have gifts on your mind. Great news—at least for now, you can pick up a gift card in New Jersey without giving up any personal information. As we noted in an entry earlier this Spring, a few prominent gift card sellers, including InComm, pulled their gift cards out of New Jersey in response to the Third Circuit’s holding affirming the 2010 Gift Card law’s provision requiring issuers and sellers of gift cards in the state of NJ to collect, at a minimum, ZIP codes from the purchasers of gift cards. For further details, click here. However, on June 25th, nearly two years after passing the highly controversial gift card law, the NJ legislature passed a hard-fought amended version of the law, Senate Bill 1928 . The Bill was signed by Governor Christie last Friday.
Unfortunately, in spite of the efforts of retailers and groups like the NJRMA, the new law still contains the controversial requirement that gift card sellers collect the zip code of purchasers of cards in NJ. It does, however, delay the requirement until July 1, 2016 (i.e., the first day of the 49th month following enactment). The reason for the delay is not stated – ostensibly, it will allow time for the NJ Treasury to issue specific guidance on how to comply with the law, and give sellers time to implement new data collection systems and adopt procedures and third-party controls. Of course, four years also provides ample time to challenge the new law–or lobby for yet another version. Indeed, InComm–which has stated that it will continue selling in NJ after all–has already announced plans to challenge the law.
The new law has a number of other important provisions, including: (1) a five year abandonment period (extended from two years); (2) a provision that only 60% of the abandoned card’s value will escheat; (3) a “cash-back” provision, effective September 1, 2012, under which sellers must provide a cash refund for any card with a balance of less than $5.00 to customers upon request. Additionally, post-purchase fees are prohibited for cards sold on or after December 1, 2012, although some activation, purchase and similar fees are permitted; expiration dates on the funds underlying stored value cards are also prohibited, although the card itself may be permitted to expire if properly disclosed. Similar to the laws in many other states, the new law exempts gift cards donated or sold below face value to a nonprofit, charitable, or educational organization; promotional, loyalty and rewards cards (for which no consideration is paid); cards redeemable for admission to events or venues at particular locations; cards usable at multiple merchants; and prepaid telecommunications cards.
It remains to be seen whether the four year moratorium on zip code collection will quell or significantly alleviate any of the fears of gift card issuers operating in NJ by permitting slow and careful implementation of the provision. Judging by InComm’s reaction to the new law, gift card industry leaders may be more likely to use the moratorium to stock their arsenal with new arguments and strategies to repeal the law’s data collection provision entirely. But gift card sellers should make sure that all the fireworks about data collection don’t distract them from the other provisions in the law and make sure they’re in compliance and ready to provide cash refunds in NJ as well. For a more detailed discussion of the new law, click here.