The Consumer Financial Protection Bureau is now looking into whether the shorter unclaimed property dormancy periods for gift cards are permissible, in light of federal law. At issue is several states attempt to collect the unused balances of gift cards after two years as unclaimed property. Federal law, specifically the Electronic Funds Transfer Act (EFTA), requires that gift cards cannot expire for at least five years.
The CFPB could use its power to preempt or override the state laws and regulations that weaken consumer protections, in this case the availability of gift cards for at least five years. The EFTA and similar laws and regulations allow state laws that provide for greater consumer protections than what the law provides for. The CFPB would have to determine that the shorter dormancy periods do not provide the necessary consumer protections that federal law requires.
Gift card dormancy periods have recently been in the news due to the New Jersey 2010 amendments and subsequent changes to five years. The original two year dormancy period was an issue in the New Jersey gift card litigation, which both sides have asked the U.S. Supreme Court to review. However, since the dormancy period was recently changed to five years, this issue, as it related to New Jersey, became moot.
Some states provide unclaimed property exemptions for gift cards, so long as the cards never expire and do not carry certain fees.