Oregon Invites Litigation
The Oregon Legislature recently introduced legislation that would reestablish gift cards as a type of unclaimed property reportable to Oregon. [https://olis.leg.state.or.us/liz/2015R1/Measures/Overview/HB2543] The state previously amended its act to delete all references to gift cards. Under HB 2543, the value of a gift card will be reportable as unclaimed property if it has not been redeemed for 3 years. Oregon thus re-joins the minority of states that require the escheat of gift cards.
Most significantly, however, HB 2543 provides that if the issuer of a gift card does not have the last-known address of the owner, the card is reportable to Oregon “if the purchase, issuance or last transaction by the owner of the gift card occurred in this state.” This provision essentially would allow Oregon to step in front of the second-priority state (i.e., the issuer’s state of domicile) when the first-priority rule does not apply and the card was sold or last used in Oregon.
If this measure passes, Oregon would appear to be inviting litigation, as one federal court has recently held that a provision similar to this was likely preempted. In particular, the Third Circuit held in 2012 in N.J. Retail Merchants Ass’n v. Sidamon-Eristoff that New Jersey’s “place-of-purchase” presumption, which provided that the address of the owner of a gift card purchased in New Jersey is presumed to be New Jersey if the issuer does not have such address, was likely preempted by the U.S. Supreme Court’s priority rules. [http://www.alston.com/Files/Publication/4312b0aa-8d56-4ed4-94c3-019e13d3490f/Presentation/PublicationAttachment/93839b98-8c5e-4b03-9076-1e34d587e3de/12-045%20New%20Jersey%20Giftcards.pdf] New Jersey has since repealed that language. Although other states have similar language in their unclaimed property acts, no state has enacted such a statute after the Third Circuit issued its decision. Thus, if HB 2543 is passed, gift card issuers will immediately have reasonable grounds to assert that the law is preempted and therefore unconstitutional.
New Jersey Seeks to Become More Business Friendly
New Jersey, which amended its unclaimed property law in 2010 to require the escheat of stored value cards (triggering great controversy, as evidenced by Sidamon-Eristoff), originally intended to require gift card issuers to collect and maintain a purchaser’s zip code. However, faced with overwhelming opposition from the business community, the New Jersey Legislature repealed the zip card collection requirement before it took effect, and the governor signed such repeal into law on February 5, 2015. [http://www.alston.com/advisories/UPNJ-Gift-Card/]
Tennessee Proposes to Do…Something
Finally, in a piece of legislation seemingly coming out of left field, the Tennessee General Assembly has proposed a bill that would prohibit the sale of gift cards in Tennessee other than in “person-to-person” transactions. [http://www.capitol.tn.gov/Bills/109/Bill/SB0923.pdf] In particular, Tennessee SB 923 provides that “[n]o retailer in this state shall sell or add monetary value to, or offer to sell or add monetary value to, a gift card to a consumer other than through a person-to-person transaction by which the retailer, or an employee or agent of the retailer, physically accepts payment from the consumer.” The purpose of this legislation is rather unclear, though what is clear is that the legislation (if enacted) would impose significant burdens and restrictions on gift card issuers doing business with Tennessee customers without offering any foreseeable consumer protection benefits.
