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Oregon Senate Bill 845

Shocking! Outrageous!

A hideous Oregon bill, S845 (easier to read in PDF), has been brought to my attention. (Thanks, Paul!)

Section 3 of this bill states that a gift card with no transactions for three years will be "presumed abandoned." Section 4 forbids expiration dates and fees (dormancy, inactivity, maintenance, or service) on gift cards.

Why?

In Oregon, abandoned or unclaimed property is held in trust for residents to claim. Interest on the property is allocated to the state Common School Fund.

"This bill protects consumers in Oregon, keeps the dollars in our state, and helps schools by adding to the Common School Fund," said Senate Majority Leader Kate Brown, who testified Monday before the Senate Revenue Committee in support of the bill. [source]

Expiration dates and fees are precisely the mechanism businesses use to ensure gift cards do not persist forever and become a looming liability, never knowing if they've been lost or destroyed or simply saved to redeem later. Fees eventually reduce the balance of unused cards to $0, eliminating any uncertainty for the businesses that issued them.

By prohibiting expiration and fees — a clear violation of the freedom to contract — and declaring unused cards abandoned property, the Legislature is cashing in on gift cards to earn interest on property it has no right to use.

You can hear the whining already: "It's for the children!" The widespread popular support for public schools makes it a favorite way for legislatures to boost revenue. Property rights notwithstanding.

A surely unintended, but harmful, effect of this bill is that the gift card balances will never go to $0 because expiration and fees are prohibited. Gift cards would have an unbounded lifespan, making it impossible for a business to know the real magnitude of its outstanding liabilities. This is a blow against the ability of businesses to manage their risk. Gift card expiration dates and fees serve a valuable purpose, and it's a shame that this has been overlooked. (Yes, I know that's a charitable interpretation, but I'm a nice guy.)

This is a bad bill.

It's also a bill that the State Senate is currently working on. It's not too late to kill it…


You may have noticed I haven't complained specifically about Section 3. I'm not opposed to the idea of unclaimed or abandoned property as such, and I do think it proper for government to define rules for dealing with it. There are circumstances where it makes a great deal of sense. For example, a few years ago I purchased some gold coins from the State of Texas in an unclaimed property auction. My understanding is that they were found in a deceased man's safe deposit box, but he had no next-of-kin and no will.

I also got a really good price, barely over spot.

Some pirate I would be if I didn't have golden buried treasure, right? Arrr!

UPDATE 2005-04-08 20:09:53 UTC: I'm told my explanation of the gold coins is supposed to read that I got them "from a dead man's chest." Right. Arrr!!!

Tiny Island