NJ Judge Puts Hold On Unused Gift Card Collection

TRENTON, N.J. (AP) -- A federal judge has put a temporary stop to New Jersey's plan to generate up to $80 million from unused gift cards, calling cards and money orders.

As part of the state budget, lawmakers passed a bill allowing the state to claim proceeds of gift cards if customers don't use them within two years. The state would claim funds from inactive travelers' checks and money orders after three years.

The judge's restraining order keeps the law from being enforced until a hearing can be held.

The law was set to go into effect earlier this week, but several companies challenged the constitutionality of it, including the American Express Travel Related Services Co., the New Jersey Retail Merchants Association, the New Jersey Food Council and American Express Prepaid Card Management Corp.

Gov. Chris Christie will have to come up with $80 million elsewhere if the law is struck down.

Treasury spokesman Bill Quinn said the administration was reviewing the ruling. Quinn said no estimate was available on how much money the state would miss out on while the court has the law on hold.

Assemblyman Paul Moriarty applauded the ruling, saying that the law was akin to a tax increase.

"The sole reason for this law is to generate revenue for the state's coffers at the direct expense of consumers and businesses in New Jersey,'' said Moriarty, D-Turnersville.

Moriarty has introduced a measure to exempt calling cards from the law "to ensure this horrendous law doesn't adversely affect those who rely on telephone cards,'' such as soldiers.

(Copyright 2010 by The Associated Press. All Rights Reserved.)