issuance; (2) the most recent indication of ownership interest; or (3) review of balance by or on behalf
of the property owner.
KPMG observation
Considering that a stored-value card is defined as a gift card, and that a gift card is defined as a stored-
value card, businesses may be perplexed when considering the applicable dormancy period and trigger
date for outstanding gift cards or stored-value cards to determine escheatability.
Washington State—House Bill 1727 gift card restrictions, implications for
escheatment
Washington State’s unclaimed property law
provides that gift cards and gift certificates are exempt if
they meet the requirements of a particular section of the consumer protection law
dealing with
dormancy fees and expiration dates. This section of the consumer protection law was amended by the
enactment of House Bill 1727 that affects the scope of the unclaimed property gift card exemption.
The current law of Washington State prohibits expiration dates and inactivity fees on gift cards and gift
certificates resulting from a retail sale. The prohibition of expiration dates does not apply if the gift
certificate is issued pursuant to a rewards or loyalty program, or a gift card or gift certificate is donated
to a charitable organization. In the event that the gift card or gift certificate is in fact donated, it cannot
have an expiration date less than one year from the date the gift card or certificate is issued.
Also, the existing law permits gift cards to be reduced by an inactivity fee under certain circumstances
such as: (1) the card must contain a printed statement that includes the fee amount, frequency and
that the fee is triggered upon inactivity; (2) the remaining value on the cards must be less than $5; (3)
the fee cannot exceed $1 per month; (4) there has been no activity for 24 consecutive months; and
(5) the bearer is allowed to reload the card.
Under House Bill 1727, inactivity fees are not allowed on any gift cards or gift certificates, and
expiration dates are not permitted on gift cards or gift certificates with a few exceptions.
Similar to
existing law, the new law only permits expiration dates on gift cards or gift certificates if issued under
an awards or loyalty program or donated to a charitable organization without any money or other value
given in exchange.
KPMG observation
Gift cards or gift certificates meeting the existing law’s requirements for charging an inactivity fee that
are currently exempt from the unclaimed property law may no longer be exempt when the new law
becomes effective on July 1, 2020. The new law is unclear as to whether it applies only with regard to
gift cards and gift certificates issued on or after July 1, 2020, or whether it applies to all gift cards and
gift certificates regardless of when they were issued. There may be some uncertainty when a retailer
that has issued gift cards with valid inactivity fees prior to July 1, 2020, tries to determine if these gift
cards and gift certificates remain exempt from the unclaimed property law or need to be reported
as unclaimed property.
For more information, contact one of KPMG’s unclaimed property professionals:
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