American Express Pulls Gift Cards From N.J. C-stores
TRENTON, N.J. -- New Jersey's new policy requiring retailers to get the ZIP code of every customer buying a gift card has led American Express to remove its cards from the state's convenience stores, grocery stores and pharmacies.
American Express spokeswoman Vanessa McCutchen told the Associated Press that the company began pulling gift cards sold through third-party retailers last week. As of today, New Jersey residents can only purchase AmEx gift cards directly from the company.
New Jersey's Treasury Department will soon require retailers to collect the zip code information as part of the state's unclaimed property law. The state believes it can then lay claim to the value of any card not redeemed after two years, the news outlet reported.
The new requirement has spurred a lawsuit filed by, among others, American Express and the New Jersey Retail Merchants Association. The case is currently being litigated, but an injunction against ZIP code collections was lifted in March, according to the AP.
John Holub, president of the New Jersey Retail Merchants Association, said the law poses serious administrative burdens to businesses and potential problems for consumers. "Retailers and gift card issuers like American Express have had serious concerns about the escheat law since it was passed nearly two years ago," he said. "I fear many retailers are likely to follow American Express' lead because the legal risk, technological burden and steep cost of complying is simply too great."
However, Treasury Department spokesman Andy Pratt told the news outlet that the new policy is a work in progress and not designed to deter businesses from operating in the state. "We're working with industry groups to determine the best way to have merchants collect ZIP codes," Pratt said. "We're not requiring it until we come up with a policy that is uniform and as least onerous as possible."
For its part, McCutchen said there is no way AmEx can ensure compliance with cards sold through third parties.
Two years ago, New Jersey's governor signed a law that allows the state to claim the proceeds of gift cards bought in New Jersey if customers don't use them within two years. It saw unused gift cards, travelers' checks and money orders as an untapped revenue source and booked $79 million from the unclaimed property in fiscal 2011, the report stated. Before the legislative revision, if a gift card went unused, the issuing business kept the money.