The Senate is considering a bill relating to gift certificates. Currently, gift certificates that go unredeemed for three years are treated as “unclaimed property.” The issuer must report it to the state treasurer’s office, attempt to contact the owner and then surrender it to the treasurer.
The bill was amended during the committee process and would extend to five years the period required for any gift certificate to be subject to abandonment procedures, including reporting to the State Treasurer’s office. It would also exempt from abandonment any merchandise-only gift certificate that does not contain an expiration date or a provision for the deduction of service fees with the lapse of time. A gift certificate of that kind would continue in effect and be redeemable indefinitely.
Business owners recognize gift certificates as a useful retailing device, but the current reporting and abandonment rules impose burdens on retailers unwarranted by the dollar value of the gift certificates in question. This is especially the case for small retailers. Eliminating the abandonment rule is a balanced way to alleviate the burden because it would allow indefinite redemption by a customer.
What other states are doing with gift cards/certificates: South Dakota – law was recently changed that retailers no longer pay unclaimed funds to the state as gift cards do not expire. Nebraska – if the gift certificate does not have a fee or expiration date there is no requirement to submit unclaimed funds to state. Minnesota – gift cards do not expire, no requirement to submit unclaimed funds to state.