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What eCommerce Merchants need to know about Gift Cards and Escheat Law

gift card escheat mapeCommerce companies sell across many states and have to deal with regulations anywhere they sell. For merchants considering gift cards, escheat is a tricky, costly part of your decision.

Each state has escheat law, which determines what happens to unclaimed property. Escheat includes many types of abandoned property - including expired gift cards.

The Credit Card Accountability Responsibility and Disclosure (CARD) Act ensures gift cards cannot expire before five years and generally limits many fees until after 1 year of inactivity. But the CARD Act is federal law and only acts as a foundation.

With each state having unique escheat laws, managing unused gift cards is costly and complicated for merchants. Details vary state by state, such as when a gift card is allowed to expire and how much the state considers abandoned.

Each state has its own rules.

  • New York defines 100% of expired gift cards as abandoned, while North Carolina only defines 60% of the value as abandoned.
  • California doesn't even allow gift cards to expire - they are valid in perpetuity.
  • Wyoming lets merchants keep all of an expired gift card if it is less than $100, otherwise 100% is considered abandoned and surrendered to the state. New Hampshire, similarly, considers 100% abandoned for gift cards over $100, but differs by not allowing gift cards under $100 to expire at all.

Can you guess how much is lost to escheat and perpetual liability?

Giftbit summarized the issue of escheat and gift cards in this infographic.

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PS. If you’re interested in your own state’s escheat law, the NCSL has a nice resource.