New bill would provide school funding from gift card dollars

Money from gift cards that remains unclaimed after three years would be held in a state fund and earn interest for schools under a bill the Oregon Senate approved Thursday.

The money would be held by the state until the owner claims it, but school districts would reap an estimated $2 to $3 million in interest the money generates beginning in 2009.

Senate Bill 460 still needs to be approved in the House and signed by Gov. Ted Kulongoski.

“I understand the retailers want to hold on to this money forever because it’s incredibly profitable,” said Sen. Ben Westlund, D-Bend, chief sponsor of the bill. “I support gift cards, I use them myself, but when is enough, enough? Whose money is it anyway?”

Gift cards are the number one selling item during the holiday season with estimated annual sales of $80 billion. But billions of dollars worth of cards go unredeemed in the U.S. each year, including an estimated $25 million to $35 million in Oregon.

Most Republicans voted against the bill because they said it would impinge on business profits and people’s private property.

“This is nothing short of outright theft. Why don’t they just come into our living rooms and steal the change out from under the cushions too?” said Sen. Ted Ferrioli, R-John Day. “If you buy or received a gift card, the value belongs to you, not the government.”

Under current law, companies that sell the cards can claim the abandoned funds as earnings if not used by the card owner.

Twenty-three states generally treat funds from abandoned gift cards as they do other private property that is abandoned, and at least six other states have passed laws that prohibit gift cards from expiring.

Supporters said the bill protects consumers because it allows them to claim their property into perpetuity, whereas the value of gift cards in states that allow expiration dates reverts back to the firm that issued them.

The program uses money generated from the value of those goods for schools but owners can claim their property at any time.

“We’re not taking coins away from the cushion, we’re not taking anything away from the consumer–the consumer gets what they paid for,” said Sen. Vicki Walker, D-Eugene, who supported the proposal. “What we are taking away is the coins from the retailer who gets to pocket the coins when the consumer doesn’t use the gift card.”

The measure also bans expiration dates and monthly service charges on gift cards but would allow retailers to keep unclaimed funds from paper gift certificates. Cards that are usable at multiple businesses and prepaid phone cards would also be excluded.