States escheat provisions (the turning over of unclaimed property to the state) for unused gift card balances has become big income for states general funds.  But beyond gift cards, companies in general are required to turn over unclaimed property to the states which then administer an unclaimed property database where consumers can look to see if there is anything that belongs to them.

With gift cards, this is a mostly futile exercise as most gift cards are not traceable to any particular name.

But with many other forms of unclaimed property, this is not the case.  Unclaimed property can take the form of a bank account which has laid dormant for many years, a credit balance on a utility account when you move, or pay from a former employer.  In all cases, the property is considered unclaimed because the company or organization with the funds does not have accurate contact information for the owner of the those funds.

When I first learned about unclaimed property databases, I searched for myself, everyone in my family, extended family, friends, etc., in all the states we currently live in or used to live in.  For my wife, I found $1,500 from a previous employer.  For my dad, I found $80 from an old utility account.  For my brother-in-laws sister, I found $1,000.  The point is, there is real money for real people in unclaimed property databases and the only thing keeping people from getting it back is educating people to look for it.

I highly recommend that everyone search for unclaimed property in their name.

To search for unclaimed property in any state, find the state’s unclaimed property website at www.unclaimed.org.  Go to that state’s unclaimed property website and enter your name for the search.  It is as simple as that!

With 40+ active sites that buy and sell used gift cards now, the market for buying and selling gift cards is a lot like eCommerce was in the early days of the internet boom.  Lots of places to shop with widely varying prices.  Since then, shopping comparison sites like PriceGrabber and Nextag have flourished and made online price comparison shopping much easier than going to each site and doing the price comparisons yourself.

What the gift card resale marketplace needs now is a gift card shopping comparison meta-site, a great opportunity for some internet entrepreneurs.

Update:  There is actually one such site, giftcardgranny.com, but it isn’t particularly effective and only appears to poll a few sites, which includes Ebay, not a particularly safe place to buy a used gift card.

The National Conference of State Legislatures has put together this great summary of state gift card laws, which also includes each state’s Escheat provisions (state’s rules on claiming unspent gift card funds as unclaimed property that must be turned over to the state), something which the slightly simpler to read Consumers Union gift card law summary does not include.

Part of the reason I started GiftCardAdvocate.com was to educate people so that they could get more value from their gift cards.  That information includes listing all the available options for selling your unwanted gift card.  Most services listed there also sell gift cards at a discount.

I was pleased to find this very straight forward introduction to selling your gift card using one of the major gift card buying/selling sites, from MSNBC.com.  If you have unwanted gift cards but have not yet tiptoed into the resale marketplace to sell them, give the article a read.

Hawaii’s governor is threatening to veto a bill that purports to sync up Hawaii’s gift card laws with the new Federal standards, but also changes the rules to allow card issuers to add new fees that are currently not allowed.

Under the proposed law, retailers would be allowed to add an up-front fee that buyers pay when purchasing gift cards, up to 10 percent of the face value of the gift card, up to $5.  The law is being proposed under the guise of syncing up Hawaii’s rules with Federal gift card rules applicable under the Credit Card Act of 2009.  Newsflash Hawaii legislators, the stricter parts of those laws apply to your state whether or not you change your state laws.

This is a real shame, as Hawaii has one of the most consumer friendly gift card laws.  We can only hope the Governor vetoes the bill.  Under current law, gift cards (actually any electronic card with a banked value, so applies to prepaid debit cards as well) are not allowed to have any fees at all.

We’ve previously reported on bogus free gift card scams on Facebook, and bogus free gift card SPAM emails, well now there is another tact that scammers are using by offering free gift cards:  text messaging.

It goes like this, you receive an unsolicited text message purporting to be from Wal-Mart and offering free gift cards under a customer appreciation program.  You call the number in the text message and they ask for your personal information, possibly including your social security number, and a credit card to pay for shipping and handling to send the gift card to you.

What they are really doing is harvesting your sensitive personal information, possibly for identity theft, and charging you many times the quoted shipping and handling cost for a “free” gift card you will never receive.

I am really scratching my head as to why people are so gullible?  Who in their right mind thinks that companies profit from giving away free $1,000 gift cards?  Why don’t people use more common sense about things like this?

If something seems a bit too good to be true, at least Google it or Bing it (or Bingle it) before you go off and give some unknown person your sensitive personal and financial information?

In another attempt to get people to go for bogus free gift card offers, this scammy press release claims to be about how to identify real free gift card offers from fake ones.  But reading it ought to give anyone reason for concern.

According to the policy of the company following things are mandatory in order to be eligible for a FREE $1000 Best Buy Gift card:

1)      You should be USA resident

2)      You should be above 18 years old

3)      You must participate in the survey program COMPLETELY!

If you can fulfill the demands of the above policy made by “Price-Rewards LLC”, then chances are more that you will definitely win a FREE $1000 Best Buy Gift Card.

Now, anyone who reads that and still tried to get a free gift card ought to have their heads examined.

Here is an interesting comment to a post on Plastic Jungle:

I was selling Visa Gift cards on Ebay for $125 for a $100 card. I couldn’t figure out why they would pay more but was happy they were. After ebay and paypal fees and shipping, I only made around $10. Well, around a week later, a guy who had purchased $1500 in cards did a chargeback on all 14 transactions. If I had not sent them with a tracking number so I could prove that they were received, I would have lost all the money. Once I gave the tracking number to Paypal, they released my money to me. If you ever sell a gift card, don’t just stick a stamp on it, you can’t prove that you sent it or that it was delivered. You need to go to your post office and pay extra to get a delivery confirmation. Boy am I glad I did it that way. 4 other people that I sold cards to tried to scam me the same way but I won because I had a tracking number. Who knows, they all could have been the same guy.

This is similar to the Craigslist scam that we reported on a few days ago, but from the perspective of the buyer scamming the seller.

While there are few options for selling open-loop (Visa type) gift cards among the plentiful sites where you can buy or trade gift cards (see our resources page), we have yet to hear that any of those sites are scams; in fact they all appear quite legitimate.  You are much better off buying of selling used gift cards through one of those services than you are through Ebay or Craigslist.

If my SPAM filter was less efficient I might have alerted people to the abundance of gift card scams that exist via SPAM earlier, but alas, someone recently forwarded me what I am sure people are getting every day.

These scams are no different than the ones that have flourished on Facebook in the last several months, namely, they are too good to be true.  In order to qualify for the free gift card, you would have to jump through quite a few hoops, including purchasing products and taking out a loan.

The real goal of scams like this is to harvest personal information.

A bill passed by the House (summary here) of Representatives this week would delay the onset of the disclosure requirements of the gift card provisions from until January 31, 2011.  The disclosure requirements are considered among the most onerous of the new gift card regulations because they all but insure that gift card issuers will have to remove the current inventory from store shelves, destroy them, and issue new gift cards with the proper disclosures on the outside of the packaging.

This is a bit of a setback for consumers, as it is possible in that time that cards that have expiration dates that don’t meet the requirements of the gift card laws will likely still be sold.  While issuers will have to honor request for replacement of those cards with new ones that have later expiration dates upon request, there are sure to be plenty of cases where consumers aren’t aware of this or store personnel are not properly trained, and deny requests.

The bill still must be passed by the Senate to become law.

Update 7/14/10:  The bill was passed by the Senate yesterday.  The rules for new open-loop gift cards discussed above will not have to take effect until January 31, 2011, for cards produced before April 1, 2010.  The industry is thrilled.

I am surprised this scam hasn’t surfaced sooner or in more ways.

As reported for the Detroit area, scammers/sellers list discounted gift cards on Craiglist.  The sellers even encourage buyers to check out the gift cards online at the retailers website and freely give them the gift card numbers.

Once the purchase is completed, the sellers claim the card has been stolen, they received a replacement, and the original gift card is left worthless.  The scammer ends up with a new gift card and the sale proceeds.

Update:  Here is a news story about just such a scam where the scammer was actually arrested.

As if gift card issuers didn’t already let us know the gift cards we pay cash for are not actually meant to be treated like cash, Sears announced that gift cards can not be used towards the qualifying purchase price of their $50 men’s clothing rebate promotion.

This sounds an aweful lot like the Apple fiasco where they would not allow iTunes gift cards to be used towards the purchase of Apple hardware in Canada.

Ok, this post is really only loosely related to gift cards.

Starbucks recently announced that they are making WiFi at all their locations free for everyone, as of July 1st.  This is a great idea!

How is this related to gift cards?  Starbucks is one of the few gift cards that I can easily completely use up.  I am a coffee drinker and if I have a Starbucks gift card in my wallet, I will gladly go to Starbucks rather than somewhere else.  With free WiFi in the mix, I might actually take advantage of discounted Starbucks gift cards if they were in front of me.

We recently reported on Plastic Jungle’s integration with First Data’s electronic gift card network, allowing them to handle some gift cards electronically, saving customers the trouble of completing transactions by mail.

Here is what First Data has to say about working with Plastic Jungle:

But now there are sites that can provide a trusted environment for consumers to sell cards they don’t want and buy cards they do want at a discount. Merchants benefit as well, because when consumers purchase gift cards they want and will use, there is an increase in store foot traffic and a reduction in outstanding liability and escheatment concerns.

For those not familiar, escheatment is the process of turning unclaimed or abandoned property to a state authority.

What they are telling us here is subtle, but important and could signal a significant change in the retailing industry’s perspective on gift cards.

For many years, gift cards have been win/win for retailers, meaning they win twice.  When a customer comes in to spend a gift card, they often spend more than the face value of gift cards.  Retailers also had the added benefit of breakage, where as much as 10% of face value of gift cards went unspent and retailers got to keep this money as profit.

However, in recent years more and more states got hip to breakage and started demanding the retailers turn over breakage to their unclaimed property coffers, presumably under the guise of making this property easier to reunite with its lost owners.  But it was no great secret that the majority of this unclaimed gift card money would go straight to states’ general fund as it is notoriously hard to reunite with its rightful owner, meaning the customer that either forgot about, lost, or had a really hard time spending the full amount of their gift card.  This has turned retailers win/win for gift cards into a win/lose.

Well, that little statement buried in First Data’s press release signals an attempt by retailers to turn their win/lose back into a solid win.  You see, by acknowledging that they no longer benefit from breakage, and trying to make it easier for customers to redeem the full value of their gift cards, or allowing someone else to benefit from an unwanted gift card, they benefit more than the unused gift card $$$ going to the state, as they get to claim that gift card money as sales and stand to benefit from the additional sales that gift card redemption typically brings.

This is a good thing for consumers.

Plastic Jungle has just announced its integration with the electronic systems of First Data, one of the large gift card networks (the system behind in-store gift card issuing and processing).  This means that they will be able to handle some gift transactions electronically for gift cards that use First Data’s network and for stores that agree to allow Plastic Jungle to do this.  It also means they can issue new gift cards electronically for participating retailers.

The bottom line is that for some transactions the part where you mail in your card or receive your new card by mail will be removed, making it faster and less cumbersome to sell them your old gift card or receive your new one (electronically).

Other features we’d like to see them add?  How about receiving funds for gift cards they buy via PayPal?  Now that they can process some transactions electronically, can they combine lower value gift cards such that they can purchase gift cards with a face value lower than $25?

A recent article on Forbes.com entitled How to Avoid Getting Stuck with a Worthless Gift Card has the following advice:

So before you buy a gift card–particularly one you don’t expect will be used immediately–you may want to check out the financial health of the retailer or restaurant that issued it.

Right, people are going to go out of their way to check out the financial health of gift card issuers.  This is not likely for gift card givers and even less likely for recipients.

We have some better advice:  If you want to avoid getting stuck with a worthless gift card (a) don’t buy them, but if you do receive one (b) SPEND IT IMMEDIATELY!

According to this article in the Los Angeles Times, about 8-10% of small businesses today offer gift cards, up from 2% two years ago.  The costs of setting up to offer gift cards can be as low as $800 plus a small monthly fee.  Many small business owners report selling many more gift cards than the paper gift certificates they previously offered.

Home Depot has a new feature where you can upload a personalized video tied to a particular gift card.

My first thought was, how stupid, and that is how many things related to gift card strike me.

But, on deeper consideration, not a bad idea.  You’ve got a gift card which specifically tells the recipient to go to a particular website and enter their gift card number to retrieve their video.  I like it.

If it wasn’t for scammy websites claiming to be able to tell you your gift card balance but really trolling for gift card numbers to steal, I would say this is a good opportunity for someone to create a website like this that works for ALL gift cards, which also allows people to print out personalized gift card holding greeting cards that also inform the recipient of the video website.

I came across this press release for a new biodegradable plastic product suitable for, among other things, gift cards.

Given how many gift cards are sold each year (billions), it is probably a good idea if they were all compostable.  Hey, how about credit cards too?

For me personally, biodegradable gift card would still make a mostly thoughtless gift in most cases.

You wouldn’t put cash in the mail, would you?  In some respects, putting cash in a letter can actually be safer than putting a fully activated gift card in the mail; as long as the envelope is thick enough to prevent the contents inside from showing through under a bright light.  Gift cards on the other hand can easily be felt in normal letters and especially greeting card-sized envelopes.

This has been a problem for a long time and hardly a week goes by where we don’t hear about a Postal employee (and even UPS) getting busted for stealing gift cards out of the mail.

So why aren’t gift card issuers doing anything to circumvent this?  For instance, how about allowing a gift card to be locked via the retailer or banks website, and only unlocked using a specific code that can be emailed to the recipient or sent in a different letter?  Or perhaps at the checkout counter providing an activation code on the receipt?