New Source of Unclaimed Funds: Unclaimed Gift Card Money
Unclaimed gift cards have become a new source of unclaimed money in America. Here are some gift card related statistics that intends to reveal the gift card circulation in America and the volume of unclaimed gift cards that are in the unclaimed money pool:
Home Depot Inc. reported $37 million in revenue from unused giftcard credit in 2009, according to Securities and Exchange Commission filings.
-Last year, American Eagle Outfitters Inc. collected more than $12 million, according to annual financial statements.
-The state of New York, which faces a $7.4 billion budget deficit, collected $9.6 million in unredeemed gift cards last year, according to data provided by the New York state comptroller.
-Corporate Research International said last week that more than 25% of consumers who received gift cards during the 2005 holiday season waited about a year to redeem them.
-Iowa collects about $1 million a year from gift cards.
-Since January 2005, the Pennsylvania Treasury Department has collected more than $1.3 million in unclaimed gift card funds and returned more than $158,000 to gift card holders.
-Consumers spent $80 billion on gift cards and gift certificates last year, the majority of which were purchased during the Christmas holiday season.
Approximately 510% – worth between $4 and $8 billion – are never redeemed, including $38 million at Best Buy and $37 million at Home Depot.
Most of the state treasury officials say that their intention is to reunite the owners of the expired gift cards and unclaimed gift cards with their actual gift money and not to swell the state coffers. Since all the states have unclaimed money programs, they consider themselves to be better equipped to undertake this task. But the fact is that Gift cards are the most difficult to track because retailers usually sell them anonymously to protect consumer privacy.
When the owner is unknown, “there’s nothing much we can do,” said Ron Schubin, director of reporting operations for the New York state comptroller. New York returned to their rightful owners around $2,150 in unredeemed gift cards last year. As a result of this unclaimed gift card volume swell, majority of the states are pursuing laws to prevent retailers from attaching expiration dates or fees to gift cards and are using unclaimed property laws to make them do it.
In terms of actual average figures, almost $8 billion is wasted every year when gift cards expire or gift cards are unclaimed, according to the TowerGroup. A lot of states who are facing sinking tax collections and growing deficit are going after unused gift cards that bolster their revenue.
South Carolina is considering legislation that would give the state the right to collect unclaimed gift-card credit. A similar measure in Texas to allow the collection of unused credit even from cards that have no expiration date passed that state’s House this spring and stalled in the Senate. Texas already collects unused gift cards with expiration dates. As of now, almost 50% of the states do not have the expired or unredeemed gift card in the unclaimed property bracket, but a lot of sates are actively considering options to include the unclaimed gift in the unclaimed state property bracket.
