Best Buy Pockets Millions From Unclaimed Gift Cards
Best Buy pocketed $19 million last year just from unclaimed gift cards- and was able to do so by setting up a separate operation in another state. That’s according to a piece in the New York Post, which estimated that U.S. companies made $3.5 billion from unclaimed gift cards alone in the recently completed holiday season.
The phenomenon known as “breakage,” which occurs when companies pocket the balance of unclaimed gift cards, is made possible by companies that set up separate operations far from where they are located. That’s because many states, including New York and Best Buy’s home state of Minnesota, have laws that allow the state government to gain control of gift card balances, unclaimed bank balances, and other such assets.
Best Buy got around those laws by establishing its gift-card operation in Virginia, which does not have such a law. Many other companies, including Home Depot, have done the same thing.