A new state law that went into effect July 1, 2014 requires that gift cards issued by Iowa-based retailers be honored forever.
“That may benefit consumers to the extent they lose a card and find it five years later, but odds are not many of them are going to fall into that category,” says Bill Brauch, director of the consumer projection division in the Iowa attorney general’s office.
The law is of greater benefit to Iowa-based businesses, according to Brauch, because previous state law had required those businesses to turn over any unused five-year-old gift cards to the Great Iowa Treasure Hunt. The Hunt is run by the state treasurer’s office and is the official repository for all unclaimed property in the state. Brauch says that means Iowa businesses are going to be able to profit from most of those unused gift cards.
“Now they don’t have to report that value to the Treasure Hunt, which does cost them some money to have to take the time to do that, but also they are basically going to get to hold the value there of what you haven’t used,” Brauch says. “Instead of sending that over to the treasurer, they’re going to get to keep it, and (maybe) not keep it forever. If you do make a claim someday, they’re going to have to honor it, but odds are nobody’s going to make a good claim.”
Last year Iowa-based businesses turned over to the state “a few hundred thousand dollars worth” of gift cards that were five years old and hadn’t been used. Karen Austin, a spokeswoman for the state treasurer’s office, says if someone comes in with an old gift card that matches what’s in the state’s vault, the consumer will be able to use it at the business where the gift was issued — if that retailer is still in business in Iowa.
“You know back several years, a lot of gift certificates were paper certificates,” Austin says. “Most of them are cards now.”
This gift card law only applies to businesses incorporated in Iowa, like locally-owned restaurants. It does NOT apply to out-of-state retailers doing business in Iowa, like the Walmarts and Targets of the world.