Claiming unused gift cards: CardHub.com examines state policies

States' role in claiming unused gift cards.Today CardHub.com released a study that evaluates state policies on collecting gift cards as unclaimed property and found two major implications for consumers: one that provides an opportunity and the one that presents a problem. The opportunity allows consumers to reclaim the full value of their expired gift cards, while the problem inhibits consumers from claiming property that is rightfully theirs.

States that collect expired gift cards help consumers

The CardHub.com study found that six of the 10 most populated states in the U.S. collect gift cards as unclaimed property – and all six collect expired gift cards. States that collect gift cards that have already expired make it possible for consumers to get back the value of their gift card by claiming it through the state, even after the merchant no longer honors their card.

States also collect gift cards before they expire

Of the six states in the study that collect gift cards as unclaimed funds, five have unclaimed property policies that allow them to collect gift cards before they expire. Most states in the study have dormancy statutes, which state that after a certain period of inactivity the merchant must report the card to the state as unclaimed property, regardless of whether the card is expired or not. If a consumer tries to use such a card, it is possible that the merchant will not accept it (particularly if it is a smaller merchant), and therefore the consumer will have to go through a difficult claims process for a gift card that they should have been able to easily use.

Why the claims process is difficult for gift cards

The difficulty with claiming the value of a gift card through the claims process often has to do with the lack of information associated with these cards. In almost every case, the person who bought it (the true owner in the eyes of the state) is not the person holding the card. Some states, such as Pennsylvania, allow the person who bought the card to sign an Affidavit and Indemnification Agreement to legally turn over the property to the gift card recipient.

Most consumers do not receive notice before a gift card is given to the state

Most states have due diligence requirements that say the merchant must try to reach the consumer through a first class letter before reporting it as unclaimed funds, but due to lack of information, often there is no address associated with the card for the merchant to send it to.

What consumers should do to avoid this pitfall

In order for gift cards as unclaimed property to be truly advantageous for consumers, the claiming process needs to be easy and straightforward. This is generally not the case, so it is wise for consumers to use the gift cards they have soon after they receive them, or alternatively, list them on a gift card exchange and sell them for cash.

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