The Gift that Keeps on Giving: New Jersey Backs Down a Little on Gift Card Requirements
The law previously required companies operating in New Jersey to maintain records of the name, address, and ZIP code of gift card purchasers. Much to the relief of retailers, the new bill eliminates this requirement.
As background, the gift card law previously imposed two major requirements on covered merchants. First, after a dormancy period of five years, it required the value remaining on stored value cards to escheat to the state to be held in an account for consumers that want to claim the funds. Second, it required any companies operating within the state to maintain records of all gift card purchasers’ names, addresses, and ZIP codes. Now, following this recent amendment, retailers will be relieved of the second requirement.
The controversial gift card law applies to all cards sold on or after July 1, 2010. The law covers merchants selling to New Jersey residents that have issued what New Jersey calls “stored value cards” with a face value over $250,000 in the preceding year. A “stored value card” is defined to include “paper gift certificates,” “electronic gift cards,” and the like, where those cards are “pre-funded and the value ... is reduced upon each redemption.” The $250,000 value threshold appears to apply to the total number of stored value cards that a retailer sells nationwide. You may recall our previous alerts detailing this law and its changes, which can be found here and here.
Although the escheat provision has yet to be eliminated, the elimination of the data collection provision is still very helpful for merchants. In particular, the previous data collection requirements stood in stark contrast to the state’s point-of-sale data collection law, which prohibited merchants from collecting personal information from consumers in connection with a credit card purchase.
All companies with a New Jersey presence should be aware of this, as well as all point-of-sale data collection laws. While New Jersey’s activities have been more publicized in recent years, it must be noted that many states have similar laws and companies should be careful to comply.