Gift cards make a nice way to support your favorite business during the pandemic shutdown. They also make a compliance trap that can mire that same business in years of expensive hassle. My new piece at Reason explores the many legal exposures, from ADA lawsuits over lack of Braille translation to class actions over fine print and even exposure to money-laundering liability.

One durable problem, in some states at least, is state unclaimed-property law. Thinking of tossing a gift card into a drawer and never using it, as a kind of tip to an enterprise that’s brought you happiness over the years? Depending on what state you live in, you might actually be tipping your state tax authorities, and laying only future legal hassle on the merchant you wanted to help. I’ve covered state unclaimed-property law both here and at Cato. (More on its intersection with gift cards: Michael Waters, The Atlantic last fall.)

Delaware’s ambitious claims over unclaimed property have resulted in pitched courtroom battles for years, only a portion of which has been over gift cards specifically. Last year a jury awarded the state more than $7 million in a triple-damage unused gift card proceeding against just one national retailer, Overstock.com.

The Blue Hen State had to rewrite its unclaimed property law after a 2016 ruling by a federal court found its existing law a violation of due process and concluded that Delaware authorities had “engaged in a game of ‘gotcha’ that shocks the conscience.” The replacement law, which explicitly lays out a claim to gift cards rather than relying on older and more uncertain language, doesn’t have a long track record yet.

Filed under: COVID-19 virus, Delaware, property law, small business, taxes, WO writings