Litigation was brought against New Jersey to challenge various aspects of the New Jersey legislation – 2010 N.J. Laws, Chapter 25 – that attempts to retroactively require reporting of gift cards/stored value cards (“SVCs”) to impose a “place of purchase presumption” for reporting of SVCs, and to significantly reduce the dormancy period for escheatment of unredeemed travelers checks, among other things. On January 5, 2012, the U.S. Third Circuit Court of Appeals in Philadelphia (“circuit court”) rendered two opinions setting forth their disposition of the legal issues before them for review. The first opinion, New Jersey Retail Merchants Association et al. v. Sidamon-Eristoff et al., discussed the circuit court’s treatment of SVC issues, while the second opinion, American Express Travel Related Services Co. v. Sidamon-Eristoff et al., discussed the circuit court’s treatment of traveler’s check issues. Generally, the circuit court affirmed the rulings of the New Jersey U.S. District Court on all key issues.
In summary, the SVC opinion issued by the Third Circuit gives the holder community both good and bad news. The good news can be summarized as follows: (i) the purported retroactive application of the provision requiring escheatment of outstanding SVCs issued prior to enactment of the law is unconstitutional, (ii) the so-called “place-of-purchase” presumption is invalid, and (iii) the “third priority rule” is unconstitutional. However, by upholding the zip code collection data requirement, those who issue SVCs in New Jersey are faced with new challenges, and the possibility that other states may seek to imitate this requirement in their laws must
For complete details and/or a downloadable PDF of each opinion, visit New Jersey Retail Merchants Association et al. v. Sidamon-Eristoff et al. and American Express Travel Related Services Co. v. Sidamon-Eristoff et al.
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