All Your Change Belong to Us

Bad legislator :

Rep. Fred Kessler (D-Milwaukee) said today that the value of unused gift cards should go to the state treasury - not to the merchant - and that change will be part of a bill he'll introduce in the legislative session starting in January.

Kessler said millions of dollars a year go unused by gift card recipients, and retailers are allowed to book the unused values after the cards expire. He cited figures from Consumer Reports showing that 19% of all gift cards are not used because they are lost or expired.

Kessler called that a "windfall," which he said could be used to support schools, health care or roads. Under his bill, after a one-year expiration date on all cards, 80% of the value of unused cards would go to the state treasury. Merchants could keep 20% of the value of an unused card to pay for processing, Kessler said.

"I'd rather have people spend the money and use the gift card, but if they aren't, I'd rather the state get the money," Kessler said.

Kessler also believes the change in your couch cushions, unused newspaper coupons, and spare french fries at the bottom of the bag ought to go to the governemnt.

Thanks to Nick Schweitzer for the tip.

Comments

[Warren]

BARKEEP!!

[P Brooks]

"Kessler also believes the change in your couch cushions, unused newspaper coupons, and spare french fries at the bottom of the bag ought to go to the government."

And wants to dispatch SWAT teams to collect them.

[fish]

Is it mandatory to be a theif in order to hold public office! I must have been absent from civics class when they taught that!

[fish]

SHIT.......thief!

[:-]

Too late. It's there forever.

[jf]

Two bills regarding gift cards failed to pass in the last legislative session; one would have eliminated fees or expiration dates on gift cards and the other would have required conspicuous posting of expiration and service charge policies.

Because why do something for the consumer, like make the cards never expire, when the government can take the money for itself?

[John]

How does the song go?

"Now my advice for those who die
Declare the pennies on your eyes"

[David]

I thought that they'd done away with expiration dates on gift cards?

Anyway, given that the transaction is between the buyer of the card and the store, what possible justification does Kessler have for the state to get anything(except maybe sales tax, which the state would get if the balances were used)?

This is just another "See, they have all this money, and we need money, so let's pass a law to take it" scam.

[violent_k]

What about rebates? If I don't send in the rebate forms why should the evil company get to keep the money?

[John]

"Because why do something for the consumer, like make the cards never expire, when the government can take the money for itself?"

Exactly, it is the same mindset that calls tax cuts "spending increases". In these people's minds, the government owns everything that you do and anything that the government allows you to keep is the same as the government spending that money. You working for money and being allowed by your masters to keep it is no different in these people's minds as the government cutting you a check from the treasury. It is a really sick mindset.

[VM]

P Brooks - Doubt if he'd, as a big nanny Democrat seeming fellow, send the SWAT. That's the jackbooted tough conservatives who do that. He'd send a team of social workers to talk about feelings and make you read *THE CLASSIC* (that's right! you know the one!), and talk about how the world would be a better place if inhabited by the vegan United Unshorn Sisters of the Apocalypse rather than the military industrial flesh eating male.

phew. 🙂

You got it, David!

[martin]

Mr.Kessler is overlooking something: Merchants gain from inflation between the time gift cards are sold and redeemed. This inappropriate windfall must go to the Gubmint, er.. the public, too, no?

[ron]

holy motherfucking christshits. i cannot believe this. fucking... there are no words.

[John M. Joy]

Connecticut has a law prohibiting expiration dates and inactivity fees on gift cards:
http://www.giftcardlaw.com/

It used to be the case, apparently, whereby unused balances were to be turned over to the "unclaimed property" fund after three years, but that has been repealed. (Don't know what happens now - merchant gets to keep it?? Has to book it indefinitely??)

JMJ

[Aresen]

Radley, you forgot the jars where you put your unwanted pennies every night.

And let's not forget the cigarette buts in your ashtray.

[steveintheknow]

Shouldn't it be "all your change are belong to us"?

[downstater]

oh man, this is a crappy idea! am i the only one who accumulates gift cards from the same place until i have enough to pay for a particularly expensive item and pay for it with about 10 gift cards? it can take me well over a year to accumulate enough of them!

some of us don't spend them for a reason!

[John]

"Doubt if he'd, as a big nanny Democrat seeming fellow, send the SWAT. That's the jackbooted tough conservatives who do that."

Go ask the Elian Gonzalaz family about that. Certainly, you need federal agents with machine guns to grap a five year old.

[Dan T.]

Wow I'm shocked. The Reasonoids prefer this unused money go into the coffers of corporations instead of helping to educate our children.

[albo]

It's "All your base are belong to us."

get it right. make your time

[Lamar]

Dan T. You're not "shocked." I think the word for it is "asshole."

I'm surprised that people will exchange US money for funny money with an expiration date. Fascinating: you exchange your money for a fake currency of less value, at face value. Stooopid....

[Bergamot]

You know, while I don't *like* the idea, I can't imagine it would have much effect.

Most businesses, when faced with such a law, would just eliminate the expiration date, and keep the money.

[Half Sigma]

It's possible that this fixes an assymetry of information problem. People buying the cards don't realize that 20% of the money spent winds up being lost.

You don't get efficient alloation of resources when one side of a transaction doesn't understand what he's buying.

I bet with this new law, the stores would stop expiring their cards, because they'd rather the money go to the customer than to the government.

[JW]

He can do this only if he pays for all the stuff I buy with the card that goes over the card amount.

[P Brooks]

The number of such "innovative lawmakers" is increasing.
The value of the dollar in foreign exchange (and in relation to store-of-value commodities such as gold) is decreasing.

Where's my graph paper?

[MadBiker]

sorry, I am a little lost here. Half Sigma or someone else, please explain the 20% loss on value of gift cards. send me an email if you don't want to post it here - I really want to know what that is all about (my knowledge of economics is sorely lacking)

thanks

[downstater]

"I'm surprised that people will exchange US money for funny money with an expiration date."

Lamar,

it does seem kind of silly when you think about it. but, i think the main reason behind gift cards is that they show at least a modicum of thought behind the giving of a gift when you have no idea exactly what to get a person - but want to exhibit a little more effort than just opening up the wallet and forking over some bills. not that said forking over wouldn't be appreciated! 😉

[Captain Holly]

Wow I'm shocked. The Reasonoids prefer this unused money go into the coffers of corporations instead of helping to educate our children.

(I know Jennifer's going to berate me for starving more Amish children, but...)

Dan, gift cards are purchased by the consumer...they are the property of whomever receives them. If the person who receives them doesn't use the card, then the merchant is entitled to keep the money, not the government.

Now, if the government were in the business of selling gift cards, they could keep the money from unused cards, much as they keep the money from unclaimed lottery winnings. But they're not automatically entitled to the unused value of someone else's property (although that won't stop them from taking it).

[Russ R]

For retailers, gift cards are both a financing blessing and an accounting curse.

On the blessing side, they get to collect cash up front (yes, cahs is still king), earn interest on the float before the card is redeemed, and profit from the percentage of card dollar-value which goes eternally unclaimed. Basically, it's an interest free loan that the lender sometimes forgives.

On the curse side, that profit from unclaimed cards never makes its way to the bottom line, because it remains an outstanding liability (unearned revenue) that offsets the asset value (cash). Without an expiration date, the unearned revenue account would, in theory, never be settled. To deal with this, firms have to keep track of every card sold and its value, so that they can account for which of the liabilities have gone stale (according to their own definitions), and write them down at the appropriate time. Then for every person who happens to find and use a card that was previously written off, the firm has to do a reversal on the value and reduce their profit.

From the company's perspective, it's much easier to stamp an expiry date on the card and transfer the balance from unearned revenue to the revenue account as soon as the expiry date arrives, so they can book the profit and be done with it.

[MadBiker]

OK, reading Russ R's post may have helped me a bit. Gift Cards are like little loans you give a company, and they can accumulate interest, gaining more profit on the money you spent than the gift card holder has to purchase items in the store.

Sounds like the same argument against income tax, that it is better to not tax income and allow a person to invest that percentage of their income privately, rather than trust the government (heaven forbid!) to use it wisely and return it to the wage earner with interest.

[Phillip J. Birmingham]

If this legislator is taking Illinois as an example, he wants unused balances to be declared "abandoned property" which here in Illinois is to be turned over to the state after (I think) five years.

There is a catch with gift cards, though -- if the merchant does not expire cards, or honors expired cards, the remaining balances are exempted from the abandoned property law.

[dave b.]

I'm surprised that people will exchange US money for funny money with an expiration date. Fascinating: you exchange your money for a fake currency of less value, at face value.

IMHO, there's no more fake currency than the US Dollar, or any other fiat currency whose value is determined by whatever a bunch of bureaucrats says it is. At least Best Buy will guarantee me the ability to redeem the face value of the card for merchandise, which is more than I can say for the Federal Reserve.

[kebko]

Retailers will just replace expiration dates with service fees. So, if you have a $100 gift card, and you go in 4 years later to buy something, there will only be $50 left on it, due to the fees. I find expiration dates to be preferable to fees. The government would see very little money from this move, but there would be de facto restrictions on what types of gift cards would be available.

[Russ R]

"Now, if the government were in the business of selling gift cards,"

They've been in that business ever since they started minting money.

Fact is, every Federal Reserve note is backed by absolutely nothing except the government's promise to accept it in payment of taxes owing. At least retailers will redeem your cards for something of value that you actually want.

From the time the Federal Reserve issues it, it serves as a non-interest bearing liability of the government, which during its long circulation has some probability of being misplaced, accidentally destroyed, or added to someone's collecction and thereby going unreedememed.

Unfortunately, the government has established a monopoly on printing money, so for retailers, gift cards are the next best thing.

Sidenote: a nation-wide retailer here in Canada has been issuing its own currency (without an expiry date) since 1958. It is so prevalent that it is accepted by other retailers, has found it's way into ATMs, and is even listed as an acceptable form of payment by eBay Canada.

[Pathological K. Trolle]

Just because the government has no legal, philosophical, or even remotely reasonable basis for such a claim, doesn't meant that it isn't the most noble political concept since kings raping virgin daughters before they are married.

[Lamar]

"For retailers, gift cards are both a financing blessing and an accounting curse."

Absolutely. You are correct that it is much easier for businesses to screw over their customers than keep enough cash on hand to honor their debts. I have a novel solution: computators with accountamanator software!

Forget the hilarious Seinfeld episode, give cash folks. Fold the shit up like origami, write a poem in the card, do a striptease, I don't care, just give cash, not "modicum of thought" gift cards.

[dave b.]

Absolutely. You are correct that it is much easier for businesses to screw over their customers than keep enough cash on hand to honor their debts.

Yet, in the unlikely event this transpires, you have legal recourse against the company; however, the government does this every single day and has not been able to honor it's debts for decades, and all people can manage to do is continue to blame the evil corporations.

[Madog]

Connecticut has a law prohibiting expiration dates and inactivity fees on gift cards:
http://www.giftcardlaw.com/

It used to be the case, apparently, whereby unused balances were to be turned over to the "unclaimed property" fund after three years, but that has been repealed. (Don't know what happens now - merchant gets to keep it?? Has to book it indefinitely??)

It remains on the books forever. The merchant, of course already has the money so if it's lost or never spent he gets 100% profit. OTOH, they can come in 10 years later and the merchant has to accept the gift card.

That's the reason that the spa where my wife works stopped giving gift cards for services. You used to be able to get a gift card for a massage or pedicure, but now you can only get them for dollar amounts. The problem was that someone might buy the card for $25 but the person using it might not come in for a year or two -- and by then the price of the service might have risen to $30. It pisses some customers off but since labor costs are fixed the business was eating the difference between old and new prices...

[Phillip J. Birmingham]

he government does this every single day and has not been able to honor it's debts for decades, and all people can manage to do is continue to blame the evil corporations.

"I LEARNED IT FROM WATCHING YOU, DAD!!"

[downstater]

origami money! now that is something i never considered.

my siblings and i stopped getting gift cards as we basically just traded the same amount from the same store. everyone sit in a circle and pass your $30 lowes card to the person on the right. birthday giving complete. now we just get together for dinner.

[Madog]

Retailers will just replace expiration dates with service fees. So, if you have a $100 gift card, and you go in 4 years later to buy something, there will only be $50 left on it, due to the fees. I find expiration dates to be preferable to fees. The government would see very little money from this move, but there would be de facto restrictions on what types of gift cards would be available.

Most of the "go anywhere" gift cards that work like credit cards are like this. They loose a certain percentage of their value every 6 months. It's a sneaky way of getting around laws that prevent expiration dates or laws like the one proposed by Rep. Kessler. I suspect that if his law was passed, the government would find that there was very little unused gift card value to be taken...

[Mike Laursen]

VM, I didn't get "The Classic" allusion. To what are you referring?

[dhex]

gift cards are kinda neat, i think. some folks are uncomfortable giving cash, so a bit for b+n or whatever is just as good, if not better.

[Dan T.]

Cap H,

Thank you, I hadn't eaten all day and that was quite filling. I do have room for dessert.

[Ron]

The doctrine of escheat, also referred to as "unclaimed property", dates back to at least the MIddle Ages. It comes from the idea that all property belongs to the King, and the subjects just get to "rent" it out for a while. If they die without heirs, or otherwise abandon the property, the King gets it back.

This common law doctrine has been supplanted in most states by statute, but it is alive and well. The most nefarious practice, in my view, is the auditing by State governments of businesses' accountants payable, and asking for payment if the payable is more than a couple of years old and the payee can't be found. It's very unfair because the State doesn't have the resources to audit everyone, so the only ones who pay are those who get randomly selected. Gift cards are just another payable, and the issue is the same.

[Ron]

By the way, I've always thought the term "escheat" was singularly appropriate.

[kevrob]

There's a reason this retread pol - this is his second turn at the state legislature, and he's also twice been a judge - is known as "Red Fred."

While unexpired gift cards, and certificates before them, are an accounting pain-in-the-neck, they have the virtue of driving business to your store. I can remember numerous customers who, given a certificate or card for the independent store I used to work for, would comment that they'd never shopped with us before, and sometimes that first visit would result in frequent patronage. My old employer never expired GC's of either type, preferring to avoid embarrassing customers who presented "old paper" as payment. They were pretty big on cultivating customer loyalty.

Kevin

[VikingMoose]

Hi Mike:

THE LEATHER-BOUND EDITION OF "HEATHER HAS TWO MOMMIES" (WITH THE SWEATY PILLOW FIGHT SCENE ON PAGE 69)!!!!!!!!!!!!!!!!!!!

cheers,
VM

[too many steves]

dhex: you're wrong, it has nothing to do with discomfort about giving cash and everything to do with the gift-giver's desire to maintain control over what the gift-receiver may do with the money. No way I'm giving $30 in cash to my obnoxious nephew so he can just use it to buy drugs or a tattoo or somesuch. No siree, he's getting a $30 gift card to the local Toys R' Us whether he wants it or not.

[Jeff P]

Lets all buy gift cards to porn retailers and send them to Kessler.

[Kwix]

Lamar | December 28, 2006, 11:38am | #
I'm surprised that people will exchange US money for funny money with an expiration date. Fascinating: you exchange your money for a fake currency of less value, at face value. Stooopid....

Oh, the irony, it is killing me!!

[Libby Tarian]

I agree with those who point out how unfair it is that the government is trying to take unearned money away from the businesses that didn't earn it.

[Kwix]

Lets all buy gift cards to porn retailers and send them to Kessler.
I second this. It'd be great. Just make sure that they are all outside of his state so he can't gain control of the funds.

Reminds me, what about retailer #1? Bentonville, AR is nowhere near this asshat's state. How does he expect to collect on them funds?

[Starving Amish Child\'s Ghost]

I'm dead now and it's all Captain Holly's fault.

I hate you, Captain Holly.

[:-]

One very nice benefit is the income that does not have to be declared. A certain someone got a nice AmEx prepaid Rewards card as a Christmas bonus instead of an extra paycheck. No witholding taxes. All the Scotch I can drink with just a signature. The perfect crime.

[Dan T.]

Oh Jennifer, you silly goose you. You know you love me.

"Jennifer T." has a nice ring to it.

[dhex]

"dhex: you're wrong, it has nothing to do with discomfort about giving cash and everything to do with the gift-giver's desire to maintain control over what the gift-receiver may do with the money. No way I'm giving $30 in cash to my obnoxious nephew so he can just use it to buy drugs or a tattoo or somesuch. No siree, he's getting a $30 gift card to the local Toys R' Us whether he wants it or not."

now, i'm no psychologist, but i think you're fucking nuts.

my folks wanted to get some shit at home depot last year. we got them a home depot card. now, admittedly, mom's been hitting the crack again and i'm pretty sure dad re-upped with the crips, but still. i just wanted them to get something nice and safe...like a tablesaw.

of course, it is possible that since i enjoy recieving gift cards, if people must give, because it simplifies their life, i am missing the greater increase of control over my life they're trying to exercise. maybe the cia put prozac in the corn syrup too.

what am i saying, maybe? HA!

[Jennifer]

it has nothing to do with discomfort about giving cash and everything to do with the gift-giver's desire to maintain control over what the gift-receiver may do with the money. No way I'm giving $30 in cash to my obnoxious nephew so he can just use it to buy drugs or a tattoo or somesuch. No siree, he's getting a $30 gift card to the local Toys R' Us whether he wants it or not."

If your nephew's that bad but you feel you must buy him a gift anyway, couldn't you just buy him something like a sweater or a book?

[kevrob]

dhex:

Any seasoned doper would know enough to find a fellow stoner who works at TrU, and work a deal. TrU-guy would set aside the "hot" action figures for your nephew, who would buy them with the gift card. Then the two of them would resell them on the collector's market, split the profits, and then score their drugs of choice.

Every Xmas and Easter kids would come into the bookstore I used to work for to return the Bibles their grandmas and aunties would give them. If they couldn't get cash for them (Grams didn't provide a receipt) they'd do an exchange or take a store credit. It was amusing to see a Red Letter KJV turned into a Tupac biography or an Anne Rice novel, I tell you what.

Kevin

[kevrob]

Let's not forget this option those "stuck" with a gift card to a store they don't shop at, or who just want the cash, can use: sell or trade it online.

Kevin

[Matt L]

My aunt gave me a Best Buy gift card for Christmas that is also an ice scraper. So even if I don't redeem the gift card I get something. A $15 piece of plastic I can use to scrape ice off my windshield.

[Half Sigma]

Let's review how bad of a deal the gift cards are for the consumer:

(1) Best case scenario is that it's an interest free loan to the retailer. Worst case, some cards have fees making them negative interest loans.

(2) If you don't reclaim your money it goes poof.

Free Market is God types will argue that people are buying the gift cards because they get some value from it. But reality is that people are stupid and they often do dumb stuff.

Like the UCC, the value of laws regulating gift cards is that every gift card purchase will have the same contract terms which increases the efficiency of the market. No one wants to waste a lot of time reading the fine print on a lot of different gift card contracts.

[kevrob]

It's always been the case that some retailers honored their gift certificates indefinitely, while others would enforce expiration dates. The only thing that changed when going from paper to plastic was the institution of fees on aged cards. Cards have advantages over the old paper certs:

1.) Many retailers allow the giver or receiver to register the cards, at the store or online, so a lost card can be cancelled and reissued.

2.) Gift cards are smaller, of a standard size so they fit in your wallet. The old GCs were of varying sizes, and subject to all the harm paper and ink can be dealt by a cruel world.

3.) If you only use part of a card's value, it's little or no hassle. Partial use of a paper certificate would require the merchant to reissue it in a smaller amount, unless the remainder was so small that change was given in cash. Cards handle this so much better.

4.)Cards are reuseable. They can be reloaded at the customer's request, or, when one is turned in during a transaction that depletes it, it can be reactivated for another customer. New certificates have to be printed.

5.)Online stores can handle gift cards. Certificates - eh, not so much.

Kevin

[Jamie Kelly]

Free Market is God types will argue that people are buying the gift cards because they get some value from it. But reality is that people are stupid and they often do dumb stuff.

As a "Free Market is God" type who would rather worship at the altar of economic liberty than suffer under the idolatry of planned economies, let me actually argue that consumers ARE in fact getting value from a gift card. It's called the value of choice -- essentially, the consumer is willing to make an interest-free loan to a company in order to avoid the risk of an unpleasantry, i.e., getting someone a gift they don't want. Anyway, just because some people "do dumb things" like lose their gift cards or forget to redeem them doesn't call for any sort of government regulation, and certainly doesn't hand a blank check to the government to steal private property. Surrogate cash may be surrogate, but it's still cash.

[highnumber]

Like the UCC, the value of laws regulating gift cards is that every gift card purchase will have the same contract terms which increases the efficiency of the market.

I don't believe you.

No one wants to waste a lot of time reading the fine print on a lot of different gift card contracts.

No one wants to waste a lot of time choosing a doctor. Maybe the gov't should run our health care system so we don't have to think about it.
No one wants to waste a lot of time choosing a new car. Maybe the gov't should step in to regulate that all autos perform about the same and have the same financing terms.
No one wants to waste a lot of time finding a better job. Maybe the gov't should take control of the economy and tell us where we should work.
No one wants to waste a lot of time finding a church that they feel comfortable in. Maybe the gov't should establish one state religion that we could all belong to.

"No one wants to waste a lot of time doing something" is a terrible reason for the gov't to step in, whether you are a libertarian or not.

[george]

Walmart(BOO! HISS, HISS!). . . Walmart here locally sells gasoline and charges three cents a gallon less when you pay with a "gift" card. I bought a card specifically for that purpuse.

[Mike Laursen]

Thanks, VM. I thought you might be referring to The Communist Manifesto, but, you're right, Heather Has Two Mommies is probably the more widely read work.

[Dave T]

I think the government should seize any "unused money" in Dan T's bank accounts in order to pay for teh skewlz. It's for the children, after all.

[speedwell]

I remember reading about some small businesses who raised starting capital by selling free product coupons to be redeemed at a later date... one was a sandwich shop, IIRC. Anyone else remember this?

My God, the hit any such creative financing concept would take if this thieving rascal's confiscation scam got passed.

[dagny]

Next thing you know some politician is going to watch Superman III and/or Office Space and try and collect all the partial pennies from rounding.

[wally the bird]

Leave it to the demacrats the robin hoods in reverse the steal from the poor and give it to the rich demacrats in their home states

[Dee]

Plain and simple attempt to take yet more of what is not their $$$$ to begin with. They must have secret groups in each state and Federal that looks at whats out there money wise and what is not being taken advantage of as much as it could be to plump up the government coffers.

Someone above Dan I think said its hard to understand why we would want businesses to keep it all instead of the kids getting it for education. Sounds good enough but the kids were supposed to get casino and lottery money to and that never happened. Why should I think this will go to that purpose. Bottom line is once they have their greedy paws on your cash they will never want to let go of it and regardless of what they say they intend to do with the money they can and do always change their minds.

They being said it is stupid to buy gift cards in general. It says you didn't bother to take anytime to buy a gift with thought. So how about this thought give the same amount in cash $$$$$!!! It works great as it is accepted at all the stores and never expires, not to mention people rarely forget they have money, unlike a balance of 12 bucks on a walmart card.

You end up with cards to several places that are not worth enough to buy any one thing from a single merchant. At least giving cash says you care enough to let that person decide where I want to spend the money and not pigeon hole me into a certain store. Plus if everyone gave cash instead of gift cards people could combine their gifts of cash with a little of their own and maybe get themselves something nice they have been wanting but would not buy for themselves. So many more options with cash its just plain stupid to give gift cards. Especially when you know they expire and you lose your money all together, WOW what a special gift.

I often wondered how the businesses account for that money at years end. They must have a column in the spreadsheet that says FREE money from FOOLS. Since cards are not taxed when purchased and when used sales tax is added do they just pay the flat sales tax on the amount left over each year and keep they rest?