States Eye Unused Gift Cards As Revenue Source
ROBERT SIEGEL, host:
In these days of unrelenting fiscal crisis, states are looking for every conceivable source of revenue. And one that's fairly painless is stepping up collections of abandoned property. Abandoned or lost property usually summons images of bank accounts or safety deposit boxes that are long dormant and forgotten. But there's another kind of lost property that's become a growth area: unused gift cards. Reporter Erica Alini of The Wall Street Journal has written about this.
And Erica Alini, first, I guess, the key point here about gift cards is that a lot of them are never cashed in or balances on them are never cashed in.
Ms. ERICA ALINI (Reporter, The Wall Street Journal): Absolutely. Americans forget a lot of money on their gift cards. They either forget to use the gift card entirely. They lose it or, you know, they forget they ever got it. Or they use just a little bit of money and forget the left over credit. Those nickels and dimes add up to 6.8 billion per year. And that's almost 10 percent of the 65 billion that Americans spend in retail or gift cards every year.
SIEGEL: And states are looking for those unused balances. At some point they become considered lost property?
Ms. ALINI: Yes. About half the states have unclaimed property loss that apply to unused gift cards. And usually a gift card will become officially abandoned property after two to five years after it hasn't been used.
SIEGEL: You have some numbers in your story in the journal about New York state…
Ms. ALINI: Mm-hmm.
SIEGEL: …and how much it's collected in unused gift cards and then how much it's managed to return to the rightful owners and it looks like a pretty good balance for the state.
Ms. ALINI: Yes. New York, the state controller collected 9.6 million in fiscal year 2008-2009 and returned about $2,000 of that.
Ms. ALINI: Yes.
(Soundbite of laughter)
Ms. ALINI: It's not very much.
SIEGEL: And the rest of it is there for the state to use.
Ms. ALINI: Yes and no. Officially the state has an obligation to return any abandoned property to you if you show up and you can demonstrate that you are the rightful owner. What happens is states are successful in returning around a third of this abandoned property that they have. So what a lot of states do is they actually have laws that allow the state to tap into that pool of cash and get some funds themselves.
SIEGEL: Here's the one thing I don't understand: Why can't the state just regard my Home Depot gift card, that's somewhere lost in a drawer, as something I'll get around to using eventually as soon as I need something, but why do they say it's theirs? Why do they say it's lost property?
Ms. ALINI: Well, the argument is that you've forgotten about it. And that you need to be reminded…
(Soundbite of laughter)
Ms. ALINI: …and that the state will do a better job of tracking you than retailers or private companies do.
SIEGEL: And this is a growth area for states?
Ms. ALINI: Yes. Unclaimed property at large is a significant growth area. The Wall Street Journal reported in early 2008 that unclaimed property collections had grown to five billion in 2006 from 3.6 billion in 2003. And within abandoned property, unredeemed gift cards are one of the new areas of attack.
SIEGEL: Well, reporter Erica Alini of The Wall Street Journal, thank you very much for talking with us.
Ms. ALINI: Thank you.