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CFPB seeks comment on conflict between CARD Act, states’ unclaimed property laws

The Consumer Financial Protection Bureau recently announced that it would consider requests to determine whether the Credit Card Accountability, Responsibility and Disclosure Act interferes with unclaimed property laws in Maine and Tennessee.

The CARD Act, which prohibits gift certificates, gift cards and general use prepaid cards from expiring in fewer than five years, would allow the enforcement of state laws that provide greater consumer protections than federal laws. The law would, however, block enforcement of state laws that offer less consumer protection, JDSupra reports.

Both Maine and Tennessee have unclaimed property laws that require unclaimed account balances on products like gift cards to be reported and remitted to the states after a certain period of time through a process known as “custodial escheatment.” The states may then use the unclaimed balances to fund general operations.

In Maine, unclaimed balances are designated as abandoned two years after December 31 of the year in which the last transaction occurred or at the time of the balance’s origination, whichever comes later. In Tennessee, however, the dormancy period for unclaimed balances is two years from the date of issuance or the expiration date of the card, according to JDSupra.

The CFPB is seeking comment on whether the application of the states’ laws is inconsistent with the CARD Act and how gift card issuers can manage to comply with both federal and state laws.

The inquiry’s implications extend beyond Tennessee and Maine to the unclaimed property laws in other states, including Alaska, California, Iowa, Louisiana, Montana, Nebraska, North Carolina, Pennsylvania, South Dakota, Texas, Washington, West Virginia and Wyoming.

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