SPRINGFIELD - The days of handing a $100 gift card to a cashier only to find it has expired could be coming to an end.
Despite opposition from retailers, legislation outlawing expiration dates and fees on gift cards was unanimously approved by the Illinois House Tuesday.
"The retailers make a tremendous amount of money on these things," said state Rep. Jack Franks, D-Woodstock. "I think it's a commonsense bill."
Current law states that expiration dates and fees need to be clearly displayed on the gift card, and the new legislation only would apply to gift cards issued after Jan. 1, 2007. The date was added as an amendment to the original legislation in hopes of easing worries from retailers.
Merchants make about $4 billion on expired gift cards each year, Franks said. He added that 62 percent of users spend over the value of the gift card in the store.
Merchants also can make interest on the money because they don't have to supply a product at the time of purchase, Franks said.
"They make it on the front," he said. "Let's say you get 100 bucks and they put it into an interest-bearing account. If it sits there for two years, it's worth $108. Then they say two years later, Oh by the way, we have $108, you can't use it all. It's just wrong."
Illinois Retail Merchants Association spokesman Rob Karr said expiration dates are needed because retailers have to pay federal income tax on gift cards if they aren't used within two years. He also said 98 percent of gift cards are redeemed 18-24 months after they are issued.
"You also get into issues of where they're issued," Karr said. "So if my grandmother buys me a card in Arizona, which may not have any laws, and she sends it to me to use here, does it expire here? No it doesn't."
A law was approved last year that provided incentive for merchants not to have expiration dates. Under that law gift cards do not become unclaimed property, which the state requires to be turned over to it if not claimed for three years.
Karr said that incentive is better than the mandate under the new legislation.
The legislation now will go to the Illinois Senate for consideration. It is House Bill 4205.