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Use It or Lose It: New Jersey Asks SCOTUS to Hear Gift Card Case

By Robyn Hagan Cain on October 12, 2012 | Last updated on March 21, 2019

Back in the day, birthday cards from grandparents came with cash. Typically, a $10 or a $20 bill. Sometimes, for milestones, a $50.

Times have changed. Now, money is transferred electronically through online banking or PayPal, and gift cards have replaced cold, hard cash.

But if you don't use those gift cards, should the state be able to collect the value? That could be a question for the Supreme Court.

New Jersey has petitioned the Court to hear a case that could help the state government claim at least $15 million each year in unspent gift card revenue to help balance the state budget, reports The Associated Press.

The dispute started in 2010 when New Jersey expanded its abandoned property law to include gift cards. Individually, the unused amounts may seem trivial, but legislative estimates suggest that unused gift cards could collectively reach $114 million in New Jersey alone this year.

Under the state's law, New Jersey retailers wouldn't be obligated to honor five-year-old gift cards, but retailers indicate they would prefer to do so rather than alienate customers. 

That, however, creates a second problem: Retailers who honored ancient gift cards would be have to seek refunds for the forfeited card balances from the state, according to the AP.

The Supreme Court established the current rules for intangible unclaimed property -- including consideration for unredeemed gift certificates and gift cards -- in the 1993 case Delaware v. New York. Under that structure, unused gift card amounts should be reported to the state of the owner's last known address as it appears in the retailer's records. If the retailer's records don't have a last known address, the property is subject to the laws of the retailer's domicile state, (usually the state of incorporation).

The Court is expected to decide before the end of the year whether it will hear New Jersey's appeal. If the justices take the case and side with the state, it may be time to clean out the state's wishing wells and mall fountains: New Jersey could go after abandoned pennies next.

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