Application of State Abandoned Property Laws to Prepaid Cards

Prepaid cards are innovative and beneficial products that have undergone significant growth in recent years. While the legal framework for these products has also undergone change and development, state abandoned property laws have not kept up.

"The majority of prepaid cardholders use all the funds on their cards shortly after obtaining the card," said Judith Rinearson, NBPCA Government Relations Working Group Chair and White Paper lead author. "Nevertheless, there are unused funds remaining on some cards, and many states' abandoned property laws are unclear or inconsistent in how they apply to today's prepaid card products. This White Paper provides an educational roadmap for prepaid card businesses to help them understand their legal responsibilities, but especially the challenges in attempting to apply abandoned property laws - most of which did not anticipate prepaid card products or, at least, the variety of products now available-in today's environment. We hope it will encourage a dialogue about the consequences for consumers and businesses related to the legal uncertainly of today's abandoned property laws."

"This White Paper represents collaboration broadly spanning the prepaid card industry. The NBPCA exists to help improve the overall business environment for network branded prepaid cards and that means a collective effort to help members succeed in their individual pursuits," said Anil D. Aggarwal, NBPCA Founder and Chairman of the Board.

NBPCA Abandoned Property Laws White Paper Summary

This White Paper recounts the history of state abandoned property laws and discusses how today's laws may impact gift cards and other prepaid card products. It then explains why the current laws do not adequately address the prepaid card market and explores the various difficulties that card issuers face in complying with such laws. Finally, the White Paper describes how the legal uncertainty creates compliance risks as well as potential negative consequences for consumers and businesses.