Comment: Better use for your gift-card balances than companies

Legislation would make it easier to claim that money or benefit a range of programs for state residents.

By Suresh Chanmugam / For The Herald

Washington is home to some of the biggest industry leaders in the world; from coffee to high tech. As a part of the tech boom in Washington, I believe our state’s corporations have a responsibility to keep up with technological advances; especially around gift cards.

Most enormous retailers like Amazon, Walmart and Home Depot are required by their states of incorporation to return unspent balances on gift cards and mobile apps to consumers through the state’s unclaimed property system. Consumers can search for their unspent gift cards and other unclaimed property across all states at

Millions of consumers, however, are unable to recover their unspent balances on gift cards issued by Starbucks or Nordstrom. That’s because 20 years ago Starbucks and other corporations pushed for a loophole to allow them to keep a customer’s unspent gift card or mobile app balance without providing that customer with a product or service.

This outdated law incentivizes companies to count on consumers to lose or forget about their gift cards or mobile app funds. In a complaint to the Washington state Attorney General, consumers accuse Starbucks of rigging its payment app with “dark patterns” to drive them into loading more money than they want to spend. In the last five years alone, Starbucks has claimed $894 million of customers’ unspent gift cards as corporate revenue, which can also inflate executive bonuses.

Washington state Rep. Emily Alvarado and Sen. Yasmin Trudeau introduced “Gift Card Accountability” legislation — House Bill 2095 and Senate Bill 5988 to close this loophole and enhance other gift card consumer protections.

The gift card loophole closure would apply only to retailers with annual revenue above $100 million, applying to an estimated 100 corporations; not your neighborhood restaurant or boutique. Customer gift card or mobile app balances that go unspent for three years would then be transferred to the state Department of Revenue’s unclaimed property program. Customers could reclaim their funds through unclaimed property at any time; and funds that are not reclaimed by consumers would be available to fund public investments.

In fact, this legislation is expected to generate an estimated additional $1 billion over the next ten years for things like affordable housing or to save the STEM program at Seattle’s Washington Middle School, which my children attend.

In response to this common sense measure to increase protections for consumers, big business lobbyists would have you think that the sky is falling.

I listened to and testified at hearings recently as lobbyists denied big businesses keep unspent gift cards funds. But big retailers’ own filings with the federal Security and Exchange Commission show that’s not true. Last year, Washington’s biggest retailers kept approximately $255 million in consumers’ unused gift cards and mobile app funds.

They also claimed consumers won’t be able to recover their unspent gift cards because most people don’t register their gift cards. That may have been true 20 years ago, but as a software engineer, I know that technological advances — such as online purchasing, gift card activations at the point of sale, and mobile payment apps — automatically link consumers with their purchases.

Corporate lobbyists also conjectured that strengthening consumer protections on gift cards would increase retail theft and money laundering. But that doesn’t make any sense because purchasers must activate gift cards at the cash register or online, preventing shoplifting. If companies are truly concerned about money laundering, they can easily create internal anti-money laundering filters to limit cash-out transactions from a customer in a single day, just as banks do.

Some also threatened that improving consumer protections would drive big businesses to move out of state. However, a recent analysis by corporate law firm Keller Rohrback concluded that scenario is “highly unlikely,” due to our state’s business-friendly tax structure and state-of-art provisions with respect to the liability and indemnification. That’s why big tech moves to Washington, and it’s one reason why I moved here 25 years ago.

It’s not every year that lawmakers have the opportunity to deliver meaningful consumer protections and put more money into housing, education and health care. Legislators can right a 20-year old wrong and make significant gains for Washington consumers by passing these common sense gift card accountability measures.

Suresh Chanmugam is a member of Tech 4 Housing, a community of tech workers who believe that our state’s tech industry can and should benefit every resident.

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