Joining American Express and InComm, Blackhawk Network, a distributor of gift cards announced April 5 that it plans to stop selling cards in New Jersey as of June 1. The issue for gift card issuers and distributors is they say there is no cost-effective way for them to comply with the law that requires collecting zip codes of gift card buyers.
Unfortunately, grocery and other retailers selling cards are not able to comply with the requirements of this law without significantly increasing their costs, jeopardizing consumer privacy, or potentially slowing down the customer check out process. As a result, Blackhawk Network is planning to remove its third-party gift and prepaid cards from the state of New Jersey beginning in June 2012, unless the law is changed. Blackhawk Network’s third-party gift cards, representing over 175 different brands, are currently sold through over 1,300 retail locations in New Jersey.
A side effect of the law, according to retailers, is that shoppers will be less likely to buy a gift card if they need to turn over personal information to make the purchase. Although the state denies it, the law seems to be an attempt to bring in additional revenue. The question is whether the industry will be able to muster enough consumer and industry outrage for the law to change.
