17
For the reasons stated above, the Bureau finds that the Tennessee Act is inconsistent with
the EFTA and Regulation E and therefore is preempted to the extent that it permits issuers to
refuse to honor gift cards sooner than the gift cards and their underlying funds are permitted to
expire under Federal law.
36
In reaching this determination, the Bureau acknowledges
commenters’ concerns that the requirement both to transfer the unused value from abandoned
gift cards to the State while at the same time complying with the EFTA and Regulation E
imposes possibly burdensome obligations on gift card issuers. However, the primary concern of
the relevant provision of the EFTA is to ensure that consumers will be able to use their gift cards
for the prescribed periods of time. So long as consumers can continue to use their cards at the
point-of-sale for as long as Federal law guarantees, the fact that issuers may face an increased
burden or cost to comply with both Federal law and the Tennessee Act—at least to the degree of
burden the commenters discussed—does not change the Bureau’s conclusion. Also, as with
Maine, the Bureau expresses no opinion on the constitutional due process concerns raised by
certain commenters, because the Bureau’s role is solely to determine whether State law
inconsistent with the requirements of the EFTA and Regulation E, not to determine whether
State law is constitutional. In this regard, the Bureau notes that its determination is limited to the
conclusion that § 66-29-116 of the Tennessee Act, as applied to gift cards, is preempted, and the
Bureau’s Notice. That case, in which the U.S. Court of Appeals for the Third Circuit upheld a decision by the U.S.
District Court for the District of New Jersey that declined to preliminarily enjoin the application to gift cards of New
Jersey’s unclaimed property law, weighed the benefits to consumers of New Jersey’s unclaimed property scheme for
gift cards. In finding that the plaintiffs were unlikely to prove that Federal law preempted New Jersey’s unclaimed
gift card law, the court emphasized several possible benefits to consumers of having their unused gift card value
transfer to the State that, in the court’s view, weighed in favor of a conclusion that New Jersey law was more
protective of consumers than the EFTA and Regulation E. See N.J. Retail Merchants Ass’n v. Sidamon-Eristoff, 669
F.3d 374 (3d Cir. 2012), reh’g denied (3d Cir. Feb. 24, 2012). Because the Bureau’s preemption determination with
respect to Tennessee law applies to the provision of Tennessee law that permits issuers to decline to honor
abandoned gift cards at the point-of-sale, rather than to the provision that requires unused gift card value to be
transferred to the State, the purported benefits of any such transfer are not germane to the Bureau’s decision.
36
The Bureau’s determination with respect to the Tennessee Act reflects the Bureau’s understanding of how the
Tennessee Act currently operates and is based in part on communications with the Tennessee Department of
Treasury’s Unclaimed Property Division. If legislative, judicial, or other official action effected a relevant change in
how Tennessee law applied to gift cards, the Bureau could revisit its determination.