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Table of Contents

Lead Story

Health care: When will payments stake its claim?

News

Industry Update

Hats in the ring for ETA awards

All clear for Intuit, ECHO merger

California chomps on gift card leftovers

Acquiring today, a shapshot

L60 at odds with Pipeline

EC interchange ruling: Merchants applaud, MC digs in

Swipe 'n shred, self-service fraud foiler

Features

AgenTalkSM:
Terence Van Horn

Triton layoffs changes, challenges

Tracy Kitten
ATMmarketplace.com

ISOMetrics:
ISOMetrics

Views

Hot, hotter contactless and mobile

David Talach
VeriFone

Education

Street SmartsSM:
Winter profit-land

Dee Karawadra
Impact PaySystem

Drill down to the fine print

Jeff Fortney
Clearant LLC

B2B and B2G: The road ahead

Aaron Bills
3Delta Systems Inc.

POS system power

Maxwell Sinovoi
United Bank Card Inc.

Interviewing for quality

Curt Hensley
CSH Consulting

PCI compliance: Don't forget the little guys

Ken Musante
Humboldt Merchant Services

Company Profile

Credit Cash

New Products

Eco-friendly two-sided receipt printing

2ST thermal receipt printer
NCR Corp.

Wireless terminal for mobile pros

Blue Bamboo H50 POS terminal
Blue Bamboo

Inspiration

Clean slate, new fate

Miscellaneous

POScript

Departments

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

January 14, 2008  •  Issue 08:01:01

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California chomps on gift card leftovers

On Jan. 1, 2008, California Senate Bill 250 went into effect. The bill requires merchants to reimburse consumers for the unused remainder of gift cards with a balance of $10 or less.

SB 250, sponsored by Sen. Ellen Corbett, D-San Leandro, and signed into law by Gov. Arnold Schwarzenegger on Oct. 13, 2007, applies to private label gift cards sold after Jan.1, 1997. It affects cards issued by retailers such as Barnes & Noble Inc., Best Buy Co. Inc. and Wal-Mart Stores Inc.

Network branded cards issued by Visa Inc, MasterCard Worldwide, American Express Co and Discover Financial Services, with the requisite card Association logo on them, are not beholden to the California law since card networks fall under federal statutes.

SB 250 amends Section 1749.5 of the California Civil Code, adding the $10 redemption provision to language that forbids expiration dates on certain types of gift cards sold in California.

"This was a straightforward bill that made sense for consumers," said Sen. Corbett in October 2007. "Last year, $8.2 billion went unspent in gift cards." According to Corbett, between 2005 and 2006, Home Depot U.S.A. Inc. and Best Buy Co. Inc. claimed $43 million each in unredeemed gift card amounts.

Limited Brands (makers of Victoria's Secret lingerie) pocketed $30 million, while Nordstrom Inc. made an $8 million profit and Michaels Stores Inc. made $7 million.

Darby Kernan, Deputy Chief of Staff for Sen. Corbett, said SB 250 is "the strictest in the nation" in imposing its $10 threshold on the redemption of unused gift cards, favoring consumers over retailers.

Policies regarding unredeemed gift cards vary from state to state. According to Kernan, Montana and Washington state impose a $5 maximum amount on gift cards that can be redeemed for cash, and Vermont allows consumers to cash out gift cards when only $1 is left on the card.

In SB 250, an unredeemed gift card is any private label gift card purchased after Jan. 1, 1997. The individual purchaser, not the retailer, controls if and when the gift card will be redeemed. In California, there are no expiration dates on gift cards.

Kernan does not believe California retailers will be upset at the new law. Kernan stated that the original unused amount written into the bill was $20.

Retailers balked at that amount but were content with the reduction to the $10 limit. Every state has laws regarding unclaimed property, called escheatment laws, whereby funds from unused bank accounts, unclaimed safety-deposit boxes and uncashed checks go into state coffers.

In recent years, the rising popularity of gift cards has made state treasurers revisit state escheat laws because of the huge revenue involved in the unclaimed amounts of gift cards for merchants. Industry experts say California is seen as a bellweather state for trends affecting the payments industry.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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