Shocker: New Taxes/Regulations Prompts American Express To Stop Offering Gift Cards In New Jersey
A lot of people don’t utilize all of the value of their gift cards. From 2005 to 2011, Americans left some $41 billion worth of gift card value unused. In New Jersey, the state government has decided to claim those unused funds for itself, and now one credit card company has decided to get out of the gift card business in that state altogether as a result.
TRENTON, N.J. (WTW) — American Express has become the first company to pull its gift cards from New Jersey pharmacies, groceries and convenience stores rather than attempt to comply with a new wrinkle in the state’s unclaimed property law.
AmEx spokeswoman Vanessa McCutchen told The Associated Press that the company began pulling gift cards sold through third-party retailers last week. As of Monday, the only way for New Jersey residents to buy AmEx gift cards, which can be used practically anywhere, is directly from the company.
New Jersey’s Treasury Department will soon require sellers to obtain the ZIP code of everyone who buys a gift card. The state believes it can then lay claim to the value of any card not redeemed after two years.
It’s hard to imagine why the state believes itself entitled to these funds. That consumers who buy these cards don’t necessarily use all the credit they purchased is not an invitation for the state government to step in and seize it. I’m not that familiar with the business model, but I’d guess that a big reason why retailers and credit card companies go through the hassle of making these cards available is because so many people leave unused balanced on them, which is pretty much just free revenue for them.
The state denying these companies that revenue makes offering these cards far less profitable. Less profit means it’s harder to provide consumers with the convenience of the cards, which many of them clearly seem to value (their propensity for not using their full value aside).
As usual, big taxes and regulations make everything worse.Tags: american express, big government, gift cards, new jersey