American Express (NYSE:AXP)
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The state of New Jersey's treasury department fired back at American Express Co. (AXP) and other critics of a new gift-card law after the credit-card company said it was pulling its gift cards from the state's retail stores.
American Express said earlier this week it was no longer selling gift cards through New Jersey retailers because of a state law that requires merchants to collect ZIP codes from card buyers.
The requirement, which has yet to take effect, is part of a law passed in 2010 that allows the state to reclaim unused gift-card balances after the cards have been dormant for two years. Under guidelines yet to be issued, retailers would be required to collect ZIP codes and potentially other information, such as addresses, to track cards purchased in the state.
"Because American Express sells its gift cards through third-party independent retailers, we are not able to ensure compliance with that part of the law," a spokeswoman for American Express said. The company's gift cards are still available from its own website and can still be used at New Jersey stores that accept American Express.
The New Jersey treasury department said Wednesday that it felt the "need to set the record straight" following American Express's decision and criticism from other retailers and trade groups. The agency said the law was intended to help consumers by preventing sellers of gift cards from charging inactivity fees. Once a card has been inactive for two years, the law allows the state to take unused balances to hold for consumers.
"Unlike balances taken as extra 'profit' by an issuer, every penny the state holds in unused gift cards can be reclaimed by consumers--forever," the agency said Wednesday. "And the value of the card is available to the customer--with interest--forever."
U.S. merchants sell an estimated $100 billion of "stored value" cards each year, with about $6 billion going unspent annually, the agency said. Collecting ZIP codes is "not a big lift" for retailers, it said, adding that businesses, including Modell's Sporting Goods and Red Robin Gourmet Burgers Inc. (RRGB) restaurants, already collect ZIP codes from gift-card purchasers.
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214; firstname.lastname@example.org