Unused gift card money: To whom should it go?

The Wisconsin State Legislature heads back into session next month. When it does one of the first bills it will consider is whether unused gift card monies should go into the state treasury rather than the merchant’s pocket. The bill is being introduced by Rep. Fred Kessler (D-Milwaukee) and according to this article in the Milwaukee Journal Sentinel he's proposing that after a one year expiration date 80 percent of unused gift card values would go into state coffers while retailers would be allowed to keep the remaining 20 percent to handle card processing, etc.

In making his announcement, Kessler cited recent Consumer Reports figures that claim 19 percent of all gift cards go unused because they are either lost or stolen, and that those unused cards amount to millions of dollars a year. Kessler says with those monies Wisconsin would more easily be able to pay for roads, schools and health care programs.

Here is another article which speaks to the windfalls many retailers are receiving as a result of unused cards. More information can also be found here, here and here.

I certainly don’t know all the particulars surrounding this issue nor do I profess to have all the answers. It’s an interesting dilemma because gift cards really are money “spent” at a retail establishment and then given to someone in the way of a kind of pseudo credit card with an established limit (though consumers can, and historically do, spend more than the face amount of those cards they do redeem). Retailers do not get to book the dollar value of the card until it is either redeemed or a certain period of time has passed without the card being used. Recipients have the option of redeeming the cards anytime they want within the authorized period (some have no expiration date) and if they choose not to or they lose the card, that is unfortunate for them. Should the retailer get to benefit from the recipient’s misfortune or failure to act? Should the state? Or should some other third party?

At first blush it seems to me Kessler’s proposal is an easy and relatively painless way to help fund state coffers, even help balance our budget. It also seems like a lazy way. Shouldn’t Madison lawmakers get their own financial house in order using the same kind of belt-tightening methods they expect cities, villages and towns to use rather than dipping into the back pocket of someone else?

I, for one, will be anxious to hear more on this as the debate on both sides of the fence in Madison unfolds.