State would get share of unused cards under bill

CARSON CITY -- Sixty percent of the value of unused gift cards given Nevadans would be forwarded to state government for support of public schools under a bill unanimously approved Friday by a Senate committee.

The Senate Judiciary Committee approved Assembly Bill 279, but not before tacking on an amendment sought by the Retail Association of Nevada.

Under the amendment, the issuer of expired, unused gift cards or certificates can keep 40 percent of the value. The remaining 60 percent would go to state government and be earmarked for education.

Lee Lipscomb, a lobbyist for the Retail Association of Nevada, said the amendment "closely aligns with the Uniform Unclaimed Property Act." She added that the issuer of the card deserves compensation for "holding the value on its records."

The bill's primary sponsor, Assemblyman Ruben Kihuen, D-Las Vegas, supported the amendment.

Kihuen said gift cards valued at a total of $80 billion were purchased nationally last year and $8 billion of that value was not redeemed.

In previous interviews, Kihuen has said he does not know how much money Nevada would receive from the value of unclaimed cards, but he imagined it would be in the millions of dollars.

His bill stipulates that funds go to the state in cases in which the issuer does not have the name and address of the card's owner. In cases in which a card bearer's name or address is known, the issuer or the state treasurer's unclaimed property office would first try to locate that person.

Kihuen's bill is the only one this session that has a real chance of raising additional revenue for education. The bill was approved 41-1 on April 11 in the Assembly.

Under a related bill dealing with all types of unclaimed property, the value of gift certificates that have no expiration date that go unused for three years from the date of issue also would be given to the state.

This bill, Senate Bill 103, also puts a 15-year period in which people must use traveler's checks and a seven-year period to use money orders or the value goes to the state.

Merchants who issue gift cards or certificates without expiration dates that are unclaimed for three years also would be entitled to keep 40 percent of the value under the Senate bill.

Companies like Wal-Mart, J.C. Penney, Costco and Target now issue gift cards without expiration dates.

Kihuen noted if the state does nothing, then the value of expired gift cards is forwarded to the state in which the company that issued the card is located.

"If the company is incorporated in Delaware, the remaining balance goes to Delaware," Kihuen said. "It only makes sense if the card was purchased here, it should stay in Nevada. We can generate much needed revenue for education without raising taxes or fees."

Judiciary Chairman Mark Amodei, R-Carson City, supported the bill, but expressed concern that companies issuing unredeemed gift cards were being allowed to keep too much money.

"Forty percent is a heck of a deal," he said.

Amodei noted the issuer keeps 40 percent, regardless if the card is valued at $50 or $200.

"It seems to me the effort to maintain a record of the purchase is a fixed cost," Amodei said.

But it is becoming standard to let companies keep 40 percent of the value of unredeemed gift cards, in part because that was the profit they could expect if the card had been used.