Monday, January 14, 2008

Gift Horse Redux: The Three Year Rule!

This just in. Or rather, my controller Roxanne was just in, and placed a copy of a San Jose Mercury News Article about gift cards on my desk. Highlighted in pink was an interesting paragraph, which had caught her eagle eye: "A National Retail Federation spokesman...emphasized that unused cards without expiration dates--and by law in California that includes all store-branded cards--still can be redeemed after a retailer records them as income." (Emphasis mine.)

Records them as income? Hmmm.

This led Roxanne to the State of California's website where she found Legal Guide S-11, "FAQs and Tips on Gift Certificates and Gift Cards." (While this guide does not include the update that took effect Jan. 1, 2008, enabling consumers holding gift cards with a value of $10 or less to receive cash from retailers instead of using them for a purchase, I think it's probably safe to assume it's up to date in other respects.)

There it was!
Question 7:
Q: "Does an unredeemed gift certificate escheat to the state?" (Oh, it's a verb all right. Imagine the television show: Escheaters!)
A: "Not if it does not contain an expiration date." (Folks who write laws enjoy double negatives; they sound scarier.) "Specified tangible and intangible personal property that is held or owing in the ordinary course of business and remains unclaimed by the owner for more than three years escheats (reverts) to the state. The escheat laws do not apply to gift certificates subject to the rules discussed above." (Emphasis mine.)

So hush my mouth. As a California gift card seller, I get to enjoy Big Sur, the Golden Gate Bridge, redwood trees, and the right to book unused gift cards over the age of three as revenue, even as I wave a fond farewell from my balance sheet?

Of course we must still honor these cards--that's part of the deal here in the Golden State, where gift cards never really expire. Even after they die.

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