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WA Bans Gift-Card Expirations, Fees
theodp writes "The Seattle Times reports on new legislation that makes WA one of 15-20 states that have passed or are in the process of adopting laws that ban expiration dates on gift certificates, which enjoyed sales of $40+ billion last year. The consumer protection law is also expected to address the cat-and-mouse games retailers play of shopping for states with unclaimed-property laws that allow them to pocket unused gift-card value. As it so happens, Delaware state law requires a company to send unclaimed gift certificate monies to the state, while Idaho allows a company to keep the cash for itself. While an Amazon.com spokeswoman said the company would adhere to the new WA law for WA residents, she declined to say why the Seattle-headquartered and Delaware-incorporated Amazon established an Idaho company two years ago called A2Z to handle its gift-card operations."
One of the worst offenders are the calling-card companies. Some of them charge hidden fees every week/month whether or not you use them... Not to mention connection fees etc., Even though the minutes are cheap it works out more expensive.. let the buyer beware!
Google for "Tyco CEO Kozlowski art work sales tax"
Because it's a scam.
And a lot of retailers are not only now expiring gift certificates, but they're also claiming a "storage fee" after a few months for maintaning the account in their records.
A valid point- I believe most accounting procedures actually require the gift certificate to be written off the books at some point.
At my last job I worked on a prepaid calling card management system. The system in all cases required an expiration date because otherwise the company would have an infinite outstanding liability to provide the service that someone has just paid for.
The same has to be true for retailers. Think what would happen if 500 years from now every previously outstanding gift card for the previous 5 centuries was cashed in for a given retailer. They'd have to give out billions in goods and services for basically nothing because the gift card revenue was realized as income in the year it was sold.
In theory, a draft can be set at a certain date in the future, and possibly the 'date' on the check could reflect this, but I've never heard of caselaw saying banks had to treat the date on a check as the date the transfer is to happen. But regardless, all you can set with a note is the earliest date, not the latest one.
Of course, no bank is required to accept any check at all. So if you're talking about how they wouldn't honor checks customers would bring it drawn on other banks, that's all well and good, although that would just piss their customers off.
However, if you're talking about checks you have issued, you can't even count on them not being cashed somewhere. And if someone walks in with one, legally, you must honor that check.
None of that, of course, has anything to do with money owed other people, or what you legally have to do with it. I'm just pointing out that those checks can still be cashed unless you stop payment on them.
And, of course, if your bank owes someone ten dollars, and they don't cash it, and you send it to the state, and they claim it, and then cash the original check, obviously they now owe you ten dollars.
Now, there's a new thing where you can duplicate a check, and it's legally the same as the original check. It's designed for exactly what we're talking about. You issue them the check, they don't cash it for whatever reason, so you issue a duplicate check and send it to the state, who then cashes it as abandoned property, and thus their original check is no longer valid, being already cashed. All that really saves is a 'stop payment' order in that case, though.
If corporations are people, aren't stockholders guilty of slavery?
However, increasingly states are passing laws that say "Forget it, if you sell a gift card here it's really a gift certificate so go see the book of laws that apply to that."
In Massachusetts, the tipping point was the bankruptcy of the Bradlee's department store chain. Bradlee's sold their gift cards up until the day that the announced their bankruptcy after business hours. The next day, when the stores reopened in the hands of a liquidator, the liquidator refused to honor the gift cards because they claimed they were not responsible for the liablities of the failed company, they were just their to extract whatever value possible from the assets.
The state eventually pressured the store into getting the liquidator to accept the cards by threatening to represent the card-holding consumers of the state as a stakeholder in the bankruptcy, which would have made a serious mess since all of the unclaimed cards would come back to haunt an already troubled company. Instead, it was simply announced that the cards were good at face value for the remainder of the going out of business sale until the end at which point they'd be worthless. The reform law was not far behind at that point.
It is illegal in this country to issue a check without the funds to back it up. As long as the check is outstanding, there is a legal responsibility to maintain the balance of an account to support all outstanding items. You can collect interest on it, but you cannot spend it. A check is not a contract in this country, it is negotiable instrument, payable to the bearer. That is why you cannot write 'paid in full' on the memo line and have it honored.
Consider what you are suggesting a little different. You write me a check for $1000, but I lose it. You refuse to cancel the check and issue another because it would cost $12. I'm out $1000, but you keep the money. In this country, after 6 months, you have to turn that money over to the state government, who I can then go to get it. In fact, they have a legal responsibility to track me down. Every month, the local newspapers carry a couple of pages asking people whose names are on those pages to call the goverment to get their money. This law protects both parties by helping settle disputes over the status of a check. There are groups of people that comb those lists and offer help to people to claim that money for a fee, which is legal if not unethical since they can call the government and get it without a fee.
The basis behind the law is the concept of abandoned property. If you see a car alongside the road, and it sits there for a few months, you can't just drive it off. The government will come along, find the serial number or registration, and track the owner down. (That happened to a friend of mine who abandoned his car, and he ended up owing 4 months storage fees plus towing plus a fine.) The same goes if you find a wallet full of money, you cannot legally keep it.
If I fail to cash that check, it becomes abandoned and the government becomes the responsible party in order to settle any dispute of ownership. If I give the check back to you, or sign it over to someone else, the ownership passes on. In fact, when I deposit the check, the check becomes the property of the bank and they give me cash to take it. The only time I actually get your cash is if I go to your bank.
Now, there is one catch. Check issuers can put a stop payment notice on a check at which time the check becomes null. Anyone who is smart will put a stop payment on any check over a couple of months old. Then it is up to the bearer of the check to resolve any issues, and there are another whole set of laws governing that.
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
Gift cards to someplace like, say Pier 1 can easily age a year or more. I only used it because I noticed it had an experation date.
Feh. Use cash. it doesn't expire. And it doesn't require people to buy stuff that they may not need just to avoid loosing it.
"If, therefore, any be unhappy, let him remember that he is unhappy by reason of himself alone."
~Epictetus
But like I said, I was always under the impression that postdating checks did nothing, so it probably wouldn't be illegal, just like it's not illegal to draw smiley faces on your checks. The date field doesn't mean anything, you can write gibberish there. (In fact, it doesn't pretend to mean anything. It doesn't say 'current date' or 'date to execute draft', it just says 'date'. Presumably you could write 'yes' there, you wished a date.)
However, if you're talking about the common practice of postdating a check with the consent on the person you're writing it to because of your current lack of funds, that is illegal. Not because of the postdating, but because the postdating means nothing, and it's illegal to write a draft on your account without the funds there, even if the funds are there when it's finally executed.
But that is more of a problem with the law and the format of checks than anything else. There is no way to make a check only valid at a certain point, so we do it orally...and in the meanwhile violate certain banking regulations.
If corporations are people, aren't stockholders guilty of slavery?
I was at a Safeway grocery store recently where they sell lots of cards for other stores such as BN, and the teller let us know that as of January 1 the oh-so-helpful government had killed the law that provided similar protection to California residents. All gift cards/certs sold before 1/1/04 were valid forever, but after that date they expired as listed on the card.
It's a pity our legislators are watching out so carefully for the consumer's rights...
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