American Express Co., InComm and other prepaid card marketers are in discussions with New Jersey officials and lawmakers that could bring an end to a situation that caused the removal of certain prepaid cards from retailers' shelves in that state.

Gift card marketers began pulling reloadable prepaid gift cards out of New Jersey stores early this month, citing the inability to ensure compliance with a new law requiring retailers to collect ZIP codes from gift card purchasers at the point of sale (see story).

Passed in 2010, the gift card law seeks to protect consumers by requiring after two years of inactivity that their unused gift card balances be transferred automatically to the state, which would hold the funds for consumers, according to an April 4 statement from New Jersey's treasury department.

Unredeemed gift card balances could be "made available for the benefit of all New Jerseyans to prevent tax increases and service cutbacks," the treasury department said in its statement.

But gift card industry representatives, including a recently formed coalition called Gift Card Users Unite, say the law would create hurdles and administrative hassles for retailers and card issuers that would make it too costly to market the cards in New Jersey (see story).

Moreover, "nearly all" national brand reloadable prepaid gift cards already have no expiration dates, and consumers have access to those fees indefinitely, with no expiration dates, the coalition contends (see statement).

The coalition invites consumers and others to support one of several proposed bills that would reverse the effects of the law.

A source close to the situation who declines to be quoted said "there are discussions" now under way between the New Jersey treasury department and gift card industry representatives that could bring an end to the impasse.

The New Jersey Senate is expected to reconvene in early May, and certain lawmakers may consider formally introducing such a bill, according to sources close to the situation.

"A bill to reverse the law could be on the governor's desk by May 31," Scot C. Mackey, a partner with the Trenton, N.J.-based law firm of MBI-GluckShaw, who represents Amex, tells PaymentsSource.

But observers say it is uncertain whether Gov. Chris Christie would support reversing the law that had broad support from Republicans when it passed in July 2010.

The New Jersey treasurer delayed implementation of the law when several gift card marketers and merchants' organizations filed suits protesting its implementation.

Even if the law is not reversed, "a whole host of solutions" could remedy the situation, Mackey suggests.

"If the treasury department came up with a clear exemption for marketers of third-party gift cards whose funds never expire, that would probably put an end to this and let gift card marketers return to selling products in New Jersey," he says.

A spokesperson with the New Jersey treasury department tells PaymentsSource there are "no new developments" in the situation.

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