In this summer’s blockbuster film,War of
the Worlds, aliens rise up after many years of lying dormant,
encrusted in the earth.
Dormancy is a different issue in the incentive world but likewise
disturbing. When you dole out gift cards or credits for individual
incentive trips, winners often must use them within a prescribed
time limit. Otherwise, the value goes “dormant,” disappearing into
the hands of the retailer or, in some cases, the government. Here’s
how the law works.
YOURS CAN BE THEIRS
One of the old common-law traditions is the “doctrine of escheat.”
This means if you do not use or protect an item that has been
assigned a monetary value e.g., you don’t cash a dividend check, or
you don’t notify the bank holding your money-market accounts when
you change your address the value reverts to the state government
by “escheat” when the check expires or the account matures.
Statutes of limitations and statutes for escheat vary from state to
THE GIFT OF MONEY
Dormancy issues also affect gift certificates and gift cards, very
popular incentive prizes. The small print, which most people don’t
read, indicates the gift’s life expectancy, after which the money
reverts to the state.
There also can be hidden fees. If the card hasn’t been used
within the specified time, and it doesn’t expire, the fine print
might indicate the department store, retailer or other issuer of
the card can begin to dwindle its value down to zero, usually a
month at a time.
INCENTIVE TO SPEND
In some cases, winners can take action to avoid these outcomes. But
first they have to know the variables. When giving out prizes,
winners should be told how long they have to redeem the awards.
Planners also can tell winners that if they haven’t used the
incentive travel award or gift card, they might be able extend the
expiration date to prevent the gifts from dwindling into nothing.
This generally is possible, with the exception of black-out periods
for travel, for no extra cost.
ON THE DOCKET
Many states are taking action to protect gift-card recipients by
expanding the laws of escheat. Some protections being written into
" Expiration dates must be printed on the face of the card in
" Merchants presented with expired cards must reissue the card
with a value equal to whatever remains on the expired one, or
" Cards must be valid indefinitely with no restrictions or
hidden fees. We see this most with department store gift cards to
which money can be added.
When there is no expiration date on the card or retailers are
prepared to honor expired cards, states leave well enough alone.
Such cards are the same as cash and anyone can use them. They never
fall under the laws of escheat.
Be selective when choosing any incentive. Suppliers who work with
major department stores, promotional products companies and the
like are apt to steer clear of gift cards that have dormancy
A good source of information is the Incentive Federation (www.incentivecentral.org), which protects the rights
of organizations and monitors the ethical use of incentive
If your incentive still has dormancy issues, ask if the
supplier or retailer complies with all state laws. Is this
compliance noted in their contract? Is the supplier or retailer
knowledgeable enough on the issues to speak to your concerns? If
Jonathan T. Howe, Esq., is a senior partner in the
Chicago, St. Louis and Washington, D.C., law firm of Howe &
Hutton Ltd., which specializes in meetings, travel and hospitality
law. Legal questions can be e-mailed to him firstname.lastname@example.org.