New Jersey recently put a gift card law into effect that is driving gift card retailers out of the state. The basic situation is that if a gift card goes unused for two years, the unspent amount is to be turned over to the state. Lawmakers say the law is in the best interest of consumers because they can reclaim unused gift card amounts via the unclaimed property database. But in order to do that, retailers must get consumer address information when a gift card is purchased. Seriously?

Kiosks Pulling Out of New Jersey

The net effect, so far, is that gift card kiosk companies like Blackhawk Network (think Gift Card Mall at Safeway) and InComm (think kiosk at Wal-Mart) are closing up shop, citing it’s too difficult to comply with the law. The governor says companies are just leaving because they don’t want to give up the profits and he’s not concerned about the exit. Regardless, as a consumer, I’d be upset.

Impact is Major Inconvenience

The law, designed to help consumers, makes life significantly less convenient both in terms or buying and recouping.

• Buying Delays – As if retailers don’t know enough about us already, the new law requires the cashier to ask for address information when purchasing a gift card. Assuming you don’t mind giving up the personal data, the checkout line will undoubtedly grow as the transaction is completed.
• System Change Costs – Stores all over the state will also have to change their payment systems to capture and house the data with the gift card purchase. The aforementioned kiosk companies say the cost of making those changes are too high and they are opting to cancel their programs instead.
• Kiosks Closed – With the kiosks closed, consumers will be unable to buy third-party gift cards when doing other shopping. If you want a movie gift card, you’ll have to stop by the theater to get it. If you want an AMEX gift card, you’ll have to get it online instead because they are no longer available in New Jersey stores. What a pain!
• Who Recoups? – So here’s the big deal for me. Who gets to claim the money? Suppose retailers and card companies go through all the cost and effort required to capture the purchaser of the gift card. Who knows where the card has gone? More than likely, it’s been given away as a gift. It’s gone! So the person who spent the money can’t get it back. And the person who has the gift card isn’t the one on record. I presume, you need a match in order to make a claim. Or, at the very least, you have to know where the card is. Can the giver get the money back? (Can I have the money back for the sweater I bought you last year that you never wear?)
  
  If the card hasn’t been used in two years, it’s likely the recipient has lost it or forgotten about. In which case, the person with the plastic won’t even know they can reclaim it. (If the sweater got thrown into the back of the closet, does he or she care that it’s missing?)
  
  This situation is flawed on many levels.

Federal Offense

Lastly, the Federal CARD ACT that went into effect in 2009 says gift cards can’t expire in less than five years and fees can’t be charged against the card unless its been inactive for over a year. So how does New Jersey justify stripping the card after two years?

Trying to Get a Piece of the Pie

For all the benefit and convenience that gift cards provide consumers, we often only hear the negative. And the criticism most often is about “breakage” – fighting over who gets the money when a gift card goes unspent. Though billions of dollars are wasting away in sock drawers, a good many more dollars are spent at the designated retailer. And since consumers often overspend their gift cards, the retailer benefits more from having a card used than having it go unused. Still, the issue of breakage is the primary focus.

Everybody wants to be the gift card ISSUER. Currently, this is the player who gets to eventually recoup the unused dollars allocated to the gift card retailer. Other companies are profiting from the multi-billion dollar gift card industry by providing secondary services such as Plastic Jungle and CardPool. Both buy unused gift cards and put them back on the market at a discount. And people like me make money on gift cards through advertising, creating gift card holders, and delivering them with a personal touch.

I understand the involvement of all these players and then some. What I don’t understand is how the state of New Jersey inserts itself into the gift card puzzle without any skin in the game. Seems to me they just want a piece of the pie without doing any of the work. Reminds me of a story about a little red hen.

If so, check out the iPhone app called Tango Card. I downloaded it a few days ago and registered my partially used gift cards in about 10 minutes. While you can register any gift card to simply keep track of it, those that match up with stores in the Tango Card database derive the most benefit. Once you enter your gift card number and PIN, for example, Tango Card can verify the balance and update it on demand.

To test it out, I registered a $10 gift card for Target. On my next trip to that store, I bought a drink at the food court with my gift card. Then I pressed “refresh” on my phone. The balance accurately dropped $1.49 showing I now had $8.51 to spend. Pretty cool.

Tango Card will also send me an e-mail once a quarter to remind me to use the gift cards registered and tell me what the current balance of each card is.

I must admit that the simple act of registering my unused gift cards prompted even me (someone who is ALWAYS thinking about gift cards) to use them. One card, in particular, had been in my wallet for a few years because the store in my area closed. I went to the web site and found out I still had about $17 on the card. Rather than carry it around any longer, I ordered something online instead. Already Tango Card did me a favor. I’ll see how the rest of the features work over time.

I’m adding this insight to the Solution Center where you can find solutions to other gift card problems.

I started this site because I want to show people how to gift card without feeling guilty. But I discovered that most of us need a little more help than that. We need to know what to do with unwanted gift cards, what to do with the balance left on a card, how to avoid gift card fraud, and so forth.

To meet this need, we added the “Solution Center” to our site. This is where I’ll put advice and information on some of your biggest concerns, such as:

• Gift cards are too impersonal.
• Not sure what to do with unwanted gift cards.
• Givers don’t want recipient to know how much they spent on a gift.
• Gift card fraud, expiration dates, and hidden fees can ruin the gift card experience.
• Kids and gift cards create a new set of problems.

As I navigate the gift card industry, I’ll update this page with ways to help you avoid gift card pitfalls so you can gift card with confidence instead. Check it out: Solution Center.