Gift card escheat

Definition

In states that escheat gift cards, the day an unredeemed balance becomes unclaimed property owed to the state.

Why It Matters

Outstanding cards are a liability a buyer usually inherits and rarely counts. Federal rules put a floor under them: the funds have to last at least five years, and the card and the funds run on two different clocks, so a card can expire while the money behind it may not. A state can go further. New York bars an expiration earlier than nine years from the later of issuance or the last reload, and bans the fees a restaurant's own closed-loop card would carry. Yet the same state treats the balance as abandoned property after five years and takes it. The merchant loses the float four years before the card can lawfully die. Nothing in that statute says what a sale does: no successor rule, no security, no regulator, so the duty to honor the cards is whatever the purchase agreement makes it.