Use them before you lose them (inevitably)

SIOUX CITY – Prior to 2014, gift card funds lost or forgotten in the State of Iowa would, after a period of five years, be turned over to the Office of the State Treasurer as unclaimed property so that the owner can be located through the Great Iowa Scavenger Hunt.

“And of course, with the Great Iowa Scavenger Hunt, we did everything we could to return the money,” Iowa Treasurer Mike Fitzgerald said.

Mike Fitzgerald

But that summer, eight years ago, a new state law went into effect that allowed merchants to hold gift card funds indefinitely, assuming the card issuer didn’t charge fee and assuming the card has no expiration date. (If an issuer charges a fee or the card has an expiration date, the funds still have to be returned to the treasurer’s office after a few years, but relatively few gift cards have fees or expiration dates; consumers will likely find these off-putting.)

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On the other hand, retailers that issue gift cards with no expiration date were also required by this law to honor their gift cards indefinitely. But as Bill Brauch, then director of the consumer projections division of the Iowa attorney general’s office, put it Radio Iowa around the time the law came into effect: “It may benefit consumers to the extent that they lose a card and find it five years later, but they are unlikely to fall into this category. ”

The gift card law was seen by some state officials as, more than anything, a gift to merchants, who could keep the money paid to them for a gift card without having actually sold anything. .

“Most companies just keep (the money) — because let’s face it, if you haven’t used a gift card in about a year, you’re probably not going to use it,” Fitzgerald said. “The Chamber of Commerce, the companies, they know that, and that’s why they came up with this. That’s sort of how the Iowa law was taken down.”

Gift cards – a prepaid debit card, usually for a selected merchant or payment service like PayPal – have grown in popularity since their introduction to the market in the 1990s. They are hot sellers during the holidays as staple gift for the proverbial hard-to-buy recipient. The giver does not need to know the recipient’s tastes, nor guess their measurements, and can instead offer a fixed sum of money to be exchanged for goods or services of the recipient’s choosing.

The total dollar amount of gift cards sold in the United States is staggering, with some estimates reaching as high as $767 billion in 2020 (other estimates vary widely), and projections suggesting the annual total could reach over a thousand. billions of dollars. in this decade.

A study published earlier this year for suggests that nearly half of Americans — about 47% — have unused gift cards. The average amount of unspent gift cards, store vouchers and credits is $175 per person, according to the website, for a total of about $21 billion.

Since the State Treasurer’s Office is no longer able to seize forgotten gift card funds as unclaimed property, they have offered guidance for gift card buyers and recipients.

“We always tell people – you know, treat gift cards like cash. Use them right away because the longer you keep them, the more likely they are to get lost or forgotten,” said Fitzgerald.

This advice makes sense for several reasons, beyond the logic of preventing the gift card from being forgotten or lost. With rising prices, a gift card of any denomination may not have the same purchasing power as when it was issued unless it is redeemed quickly. And if a retailer goes bankrupt, the only way for a gift card holder to recover anything would be to stand in line as a creditor in bankruptcy court, a step only a few, if any, would be ready to cross.

The best defense against a misplaced gift card? Give them the slip.

“When you buy a gift card, keep the receipt. Because, you know, after a year or two you go back into the business and, ‘Oh, sure, you had a gift card here,'” a said Fitzgerald. “Well, here’s the receipt!”

Michael N. Clark