Daniel Gritzer

As consumers, we often purchase gift cards for ourselves or loved ones, but what happens when those cards go unused or unclaimed? This is where the Delaware Escheat Law comes into play, which requires companies to turn over unclaimed property, including gift cards, to the state. In this article, we will explore the ins and outs of the Delaware Escheat Law and what it means for consumers who may have unused gift cards sitting around.

What is the Delaware Escheat Law?

– It is a law that requires businesses to transfer unclaimed property, including gift cards, to the state after a certain period of time.

How long does it take for gift cards to become unclaimed property under the law?

– In Delaware, gift cards are considered unclaimed property if they have been inactive for five years.

What happens to unclaimed gift cards that are transferred to the state?

– The state becomes the owner of the gift cards and is responsible for trying to return them to their rightful owners.

Can businesses avoid transferring gift cards to the state under the Delaware Escheat Law?

– No, businesses must comply with the law and transfer unclaimed gift cards to the state.

How can individuals claim their unclaimed gift cards from the state?

– Individuals can search for their unclaimed property on the Delaware Escheat website and file a claim to receive their gift cards.

After learning about the Delaware Escheat Law and its impact on unclaimed gift cards, users can benefit in several ways. Firstly, they can gain a better understanding of the legal framework that governs unclaimed property, which can help them keep track of their own assets more effectively. Additionally, they can learn about the potential consequences of failing to claim gift cards before they expire or are escheated, which can help them avoid unnecessary financial losses. Finally, users can take steps to protect their assets and ensure that they do not fall afoul of escheat laws in Delaware or other jurisdictions.

Brenda Mayrack never intended to become an unclaimed-property czar. Even among legal specialties, the field is particularly obscure During law school at the University of Wisconsin, she remembers hearing only a minute lecture introducing the topic at the end of her trusts-and-estates class. Because that money belongs to the consumer, not the insurance company or the bank, state offices of unclaimed property step in. While in some regions, companies take it for themselves, an increasing number of state governments seize it as unclaimed property. Much of that money is then directed into government general funds, where states use it to patch up holes in their budgetsa strange and little-noticed chain of monetary custody in which cash intended for a Colorado Office Depot can wind up paying for infrastructure hundreds of miles away. Read The gift-card economy. No state has had more success with this approach than Delaware. Other states are following its lead. Earlier this year, Colorado tightened its rules regarding gift-card money as part of a broader law that also entitled the state, for the first time, to spend unclaimed property in its annual budget. Some lawyers have considered claiming unused money stored in video games and cryptocurrency. As the Trump administration continues to cut federal funding for state programs, legislators desperate to make up the shortfall are turning to a patchwork of forgotten microtransactions you meant to spend on lattes or in-game wardrobe upgrades to help. Unclaimed-property laws date back to feudal England, when the Crown was quick to seize control of land owned by citizens who had no heirs. But as the majority of unclaimed property shifted from physical objects such as cash and land to assets that lacked clear geographic originsand, therefore, a clear state to claim themthe law has become more complicated. In the case Texas v. New Jersey , the Supreme Court ruled that, if the address of the owner is known, all the unclaimed property should revert to the state of residence. If not, the state of incorporation for the company that holds the property gets the money. That makes Delaware, the site of incorporation for more than 60 percent of public companies, one of the top recipients of unclaimed property across the globe. Gift cards have been a particular boon. Since few companies retain the addresses of gift-card owners, jurisdiction is almost always awarded to the state of incorporation. And to make sure it gets its due of gift-card proceeds, Delaware has hired private auditors to inspect the books of companies that are not particularly eager to publicize their extra cash. The state is probably right to be vigilant. In recent years, companies have become especially adept at circumventing unclaimed-property laws, according to Mayrack. In these states, companies can funnel all unused gift-card money into their own coffers after five years, an expiration period mandated by Congress in Even companies based in states with stricter laws are cutting corners just to avoid having their gift-card money seized as unclaimed property. Rather than contracting with legitimate third-party gift-card brands, some have allegedly set up shell companies to stash their unused gift money out of state. In one recent case, Delaware sued Overstock. Gift cards alone are not a massive revenue source for any state, but with many regions facing budget cuts, any extra wiggle room helps. In , the nationwide return rate was roughly the same 42 percent. If the money just sits there, why not use it? Legal advocates such as Levy see this approach as the future. Yet an element of the low return rate is self-fulfilling. Without any incentive to do otherwise, some states allocate minimal fundsor none at alltoward notifying consumers that their property is on hold. Since taking office in , Yee has pushed the state to devote more resources to returning unclaimed money rather than spend it on government programs if no one reaches out to claim it. Still, spending this money on state programs is a widespread practice. In her research, Levy discovered that the majority of states do spend unclaimed money, either by pouring it directly into the general fund or by putting it toward specific uses, such as housing and infrastructure. Skip to content Site Navigation The Atlantic. Popular Latest. The Atlantic Crossword. Sign In Subscribe.
Gift cards are a big business. Which means that gift cards are also an attractive source of potential unclaimed property for states. However, many companies have used careful planning to avoid unclaimed property liabilities related to unredeemed gift cards. One whistleblower that worked for companies doing this planning, but then went to work for a top Delaware audit firm, says that what some companies went too far in their gift card planning.