Protect your Gift Cards

Lincoln, Neb. It’s happened to nearly all of us: in the rush of the holiday season, the smallest present gets misplaced. While many of us will take extreme measures to recover that lost earring or tiny toy, we unwittingly allow billions of dollars in gifts to slip from our grasp each year.

It’s happened to nearly all of us: in the rush of the holiday season, the smallest present gets misplaced. While many of us will take extreme measures to recover that lost earring or tiny toy, we unwittingly allow billions of dollars in gifts to slip from our grasp each year.

I’ve learned as a consumer and immediate past president of the National Association of Unclaimed Property Administrators it is not safe to leave your balance unused.

While unclaimed property laws in most states require the balance to be given to the state to be held for the owner, gift cards are subject to a significant loophole. I bought a gift card recently and realized later the clerk never recorded my name, let alone my address. Unlike most unclaimed property, if I lost the card, I would have no proof of ownership nor would the state have any way to notify me.

With spotty records connecting cards and owners and a deeply flawed judicial precedent for getting the cards to the correct state, the owner only recovers a small percentage of the $6.8 billion in unused balances.

As Nebraska State Treasurer I hear about this problem every day, and it’s a shame. This money belongs to the people who purchase the cards and those to whom they gift them. It should no more be kept by the retailer or held in government coffers than a clearly identified wallet full of cash dropped on a sidewalk.

With no clear solution to the problem, I suggest a few simple steps for consumers and businesses:

• If you purchase a gift card, keep track of it. Websites such as www.leveragecard.com allow users to record card registration numbers and automatically update account balances and expiration dates. If you lose your card, the information you’ve stored will help retailers issue a replacement. There is even an iPhone app which stores information for you.
• Keep track of which cards expire and which have finance charges. Some businesses charge dormancy fees of up to several dollars for each month a card isn’t used. Retailers often reveal this information only in the smallest of print, so be sure to ask the salesperson and scrutinize the fine print before you buy.
• If you own a business that issues gift cards, show good faith to your customers by not imposing expiration dates or finance charges. In the long run, it simply doesn’t make sense. Nebraska is one of many states that does not require gift cards to be turned over to the State- unless they have an expiration date or finance charge. Indefinitely honoring gift cards builds goodwill with your current customers and makes your business more attractive to future customers.
• If your business issues gift cards, record the names and addresses of people who purchase your cards. Without a name, it’s nearly impossible for state unclaimed property programs to repay the owner.

The Federal Reserve currently is considering rules that would prohibit the sale of gift cards expiring in fewer than five years and restrict the imposition of dormancy fees on gift cards. This would be a step in the right direction, and, combined with commonsense on the part of issuers and consumers, would go a long way toward protecting gift card consumers.

Currently, the majority of state compiles their unclaimed databases on www.missingmoney.com.  This site lists the owners of unclaimed property, including gift cards. Search for your name and the names of your relatives, friends, and businesses. With billions of dollars of unclaimed property in state accounts, it may be a worthwhile gift to yourself.