TRENTON, N.J. (AP) — Two major players in the gift card market have announced plans to pull out of New Jersey rather than comply with a law that lets the state claim the value of unredeemed cards after just two years.
Blackhawk Network and InComm made separate announcements Thursday that they would quit doing business in New Jersey in June unless the law is reversed.
The companies — third-party providers of gift cards to malls, groceries and convenience stores — told The Associated Press it's too hard to comply with the changes in New Jersey's unclaimed property law. The law requires gift card sellers to obtain ZIP codes from buyers so the state can claim the value of unused cards after two years. Without such information, the value of unused cards would revert to the company or to the state in which the company is incorporated.
American Express removed its gift cards from New Jersey last week. As of Monday, the only way for New Jersey consumers to buy AmEx gift cards, which can be used practically anywhere, is direct from the company online.
California-based Blackhawk supplies 175 gift card brands to 1,300 New Jersey retailers, primarily groceries.
Atlanta-based InComm supplies 2,500 retail locations with gift cards for such brands as Visa, MasterCard, iTunes, Macy's and Subway.
"The passage and potential implementation of these legal changes have caused significant uncertainty for New Jersey consumers and retailers," said Blackhawk President Talbott Roche. "As it stands now, Blackhawk Network and its retail partners do not have a cost-effective way to record data from gift card purchasers or their ultimate gift recipients."
Similarly, InComm President and CEO Brooks Smith said the company cannot ensure compliance with the law because its cards are sold through third parties.
"We unfortunately have no choice but to remove all our gift cards and gift card destinations from retail locations in the state of New Jersey," Smith said in a statement.
The state saw unused gift cards, travelers' checks and money orders as potential new revenue sources, projecting $79 million for the 2011 fiscal year. However, retailers sued following enactment of that year's budget, so most of the potential income has yet to be realized.