An injunction on the state’s escheat law is still under review in the 3rd Circuit Court of Appeals, leaving New Jersey businesses confident they won’t have to deal with the regulations this Christmas.
John Holub, president of the New Jersey Retail Merchants Association, said he is confident the case will be ruled in favor of the injunction, which prevents retailers from having to provide gift card purchasers’ ZIP codes, to protect unused card balances from escheatment in other states.
The escheat law would have allowed the state to seize the value of unused gift cards after two years. Holub said the original legislation was intended to fill budget gaps in the fiscal 2011 budget, which ended June 30. Estimates ranged from $32.9 million to $79.58 million in possible collections for the state under the law.
“It was an ill-conceived policy,” Holub said. “There was no way the state of New Jersey could make this retroactive … that’s the only way they would have ever gotten money for last fiscal year.”
Holub said if the court rules against the injunction, he intends to explore current legislation introduced by State Sen. Paul Sarlo (D-Wood-Ridge) and Assemblyman Patrick Diegnan Jr. (D-South Plainfield) that would reverse the original law. The Senate already has had two hearings on the new law.
“I would like to think that no one in Trenton would like to seize gift cards from consumers,” Holub said.
Holub has said major retailers in the state would stop selling gift cards in New Jersey if the regulations were enforced. Gift cards are a $24.7 billion industry, according to an industry watcher, and many local merchants have already announced holiday gift card deals.
A request for comment from Sarlo was not answered before publication.