Tuesday, April 10, 2012

Desperately Seeking Tax Revenue, New Jersey Stoops To Stealing Gift Card Balances

First off, it must be pointed out just what a ridiculously bad deal gift cards are. By paying, say, $5 extra to purchase a $100 card, the buyer is basically handing free money right over to whatever company issued the card. So they were already not the smartest purchase a person could make, and if the State of New Jersey persists in its latest nefarious tax collection scheme, it's about to get a whole lot worse. Here is Huffington Post Money with the details:
Like many states on the hunt to fill in budget shortfalls, New Jersey is getting creative. The state is making a grab for its residents' gift cards.

If you live in New Jersey and wait more than two years to cash in on that Red Lobster gift card that your boss gave you, you'll be out of luck. Under a new state law, New Jersey will take control of funds on gift cards that have not been used for two years. The law could potentially translate into millions of dollars for the Garden State, which would hold the gift card money as "unclaimed funds." That means New Jersey will keep that money in state coffers rather than a consumer being able to access it through the card.

But gift card makers, unwilling to part with so much money in unredeemed funds, are fighting back, pulling out their wares from the state altogether. On Thursday, Blackhawk Network and InComm, the companies behind hundreds of major name-brand gift cards sold through thousands of vendors, said they are pulling their cards from New Jersey vendors starting on June 30 if not sooner. Earlier this week, American Express pulled its cards from New Jersey retailers.

The new law would make card sellers responsible for gathering from buyers certain personal information, such as a ZIP code. That information would then be used by New Jersey to collect the unused money on the cards into the state's unclaimed money fund 24 months after the last time these cards were used.
There are a couple of issues to consider here. First there is the invasion of privacy aspect of collecting customers' personal information. But that seems to be pretty much par for the course in America these days. Corporations and the government continually push the limits in that area, and as long as the vast majority of the public remains completely asleep at the switch about it, nothing is going to even put the brakes on that particular trend.

But more importantly, exactly what justification is there for this method of tax collection? It is so completely arbitrary as to have the appearance of out-and-out theft. Don't get me wrong, I am not an anti-tax reactionary. Government needs money to operate, and taxes are the price people pay for living in any society. But those taxes should be fairly and equitably assessed and there should at least be some articulable justification for them. This asshole move fails on both counts.

Heaven forbid that the Garden State might consider a more just and equitable tax to try and make up its budget shortfall, like maybe one on all of those financial sector scumbags who live in the state. Taxing a fucking asshole banker just for BEING a fucking asshole banker is every bit as arbitrary as confiscating people's gift card balances. And you know that one of the reasons this odious law passed is that millionaire bankers don't buy $100 Best Buy gift cards.

But wait, the state might argue, this action isn't REALLY theft because we have provided a fail safe:
Procrastinating residents could still obtain any remaining balances on the gift cards by contacting the state's unclaimed funds office.
Oh yes, that is just what I would want to do if my gift card balance got confiscated, wrestle with the state government's Orwellian bureaucracy trying to get my $100 back. How much do you want to bet that the office that would field calls about such inquiries will have the biggest nightmare of an automated telephone answering system ever installed in any government office? If you are ready to abandon all hope, please press 7.

But who is ultimately responsible for this abomination? Why, you are of course. And by "you," I mean the average dumbass American consumer:
Under federal law, gift cards must be usable for at least five years after purchase, though most do not have any expiration date. Consumer advocates have criticized gift cards because consumers often forget about them or leave balances unused.

Redemption rates are low for cards and as much as $41 billion in the United States went unspent on all gift cards from 2005 to 2011. In some cases, activation or dormancy fees can eat up small amounts of money left on cards. All these things have made them lucrative for card makers.
It kind of makes you wonder why stores even bother charging the $5 purchase fee in the first place, doesn't it? You would think that sales of the cards, and hence profitable unredeemed balances, would be even higher if they just gave them out for free.

What can you say about a society which is so wealthy yet addle-minded that its citizens can afford to piss $41 billion down the sewer for nothing? There are whole countries out there that don't have a GDP that large. To put that number in perspective, it equals over $100 for every man, woman and child in America. That means the average family of four has put over $400 onto unused gift cards and have just forgotten about them. No wonder so few people get upset and protest moves like one. It's not like they even noticed just how blatantly they were getting ripped off in the first place.

Bonus: The gift


  1. Another obscene scam is the farcical redemption process to obtain the "rebate" promised when you make a purchase, especially electronics like phones. They make it so complicated to send in the claim that a large percentage of purchasers never bother.

    And another sick scheme - at least, in New Jersey - is that when people have their home repossessed and it's sold at auction, if there's any money left after paying the mortgage, the state gets it. The homeowners can claim it, but most of them have no idea they can, let alone how to go about doing it.

    The illegitimate economy has to dwarf business done in the open, even leaving out drug money. When I first moved to this state I was pretty naive - I grew up in an academic family, with no extra money to hide away, and no way to dodge taxes. One of my new friends was complaining that her home builder wouldn't take cash for the house - CASH!! Hundreds of thousands! I couldn't imagine why she would want to pay in cash anyway, so without a trace of embarrassment she explained that because her husband owned a chain of retail stores they skimmed cash out of the register.

    Imagine...I was shocked!

  2. Hey Bill, I wonder how New Jersey citizens would react if the Card issuers got together and put up a full page ad in every paper in the state that said simply that the state was about to STEAL their gift card money.

    I'd bet there would be a lot of cards used right away, (boost to the economy) and a lot of local statesmen with an ear full of fury.

    1. Not there is a stimulus plan even I could support. :)

  3. Is there any truth to the rumor that Governor Christie has specifically exempted Wendy's gift cards?

    1. No, I believe that was Hungry Hippo. :)

    2. Ha! No Wendy's gift card in the vicinity of Christie would last two hours let alone two years. Bloated corporate fascist.

  4. Here is something somewhat unrelated that I've recently discovered. I'm on SNAP (that's food stamps). My roommate is not. We sometimes go shopping together. Last week we went shopping, I bought my food and she bought a bottle of rum. Previously when we would go shopping, we would have it rung up separately until a cashier informed us that ringing it all up separately was not required; the non-SNAP items could be payed for with her card as per usual. So last week we actually looked at the receipt(s). There are two receipts in such a situation, one for the groceries and one for the rum.

    Here's the thing - the TAX on the rum is applied to the SNAP transaction! Unbelievable! I'd like to spread word around about this because it is appalling to me. Any ideas?

    1. Start making your own rum from tax-free ingredients.