1. University of Illinois Merchant Card Services
Office of Business and Financial Services/
Treasury Operations and University Accounting and Financial Reporting
Presented by , Rebecca Kornegay, E-Commerce Coordinator –Merchant Card Services and Tiffany Tsou, Financial Analyst-UAFR
Introductions:
OBFS-Treasury Operations-Merchant Card Services and University Accounting and Financial Reporting
February 9, 2009

2. Overview
Illinois gift cert/card legislation (Public Act )-Effective January 1, 2008
Gift Cards/Certificate Sales Allowance, OBFS Policy and Procedure, Sec 5.14
State Treasurer’s Office Requirement for unclaimed Property reporting
New Illinois gift certificate/card legislation, (Public Act) effective January 2008, Survey to assess units issuing gift cards/certificates 2007, prior to legislation effective date January 1,2008. BMG/AFO presentations at all campuses 9/2007.
Thank you-Departments-responded to survey for supporting efforts as partnership for University’s due diligence to report unclaimed property to state and meeting new Legislation of Gift card/cert Public Act.
OBFS-Policy and Procedures –has been published Sec 5.14
State Treasurer’s office requires that expired, unused gift cards/certificates value be turned over to the State as unclaimed property. University Accounting and Financial Reporting UAFR creates an annual unclaimed property report which is submitted to the State Treasurer’s Office.

3. OBFS-Merchant Card Services
Merchant Card Services is responsible for the administrative oversight of gift cards/certificates sales by the campus units.
Prior to initiating the sale of gift cards/certificates, units must contact OBFS-MCS at or phone

4. UAFR-Unclaimed Property Reporting
University Accounting and Financial Reporting is responsible for the administrative oversight to annually report unclaimed property of Gift cards/certificates sales to the State.
UAFR contact for Gift cards/certificates unclaimed property reporting is Tiffany Tsou, phone or

5. Definitions
Gift certificate is a paper or printed form that your unit sells and has future value for the gift certificate recipient.
Gift card is a hard plastic card that has magnetic stripe on the back and is issued with future value for the recipient or customer.
Bank-issued is a plastic card with a magnetic stripe on the back of card, encoded value and bank logo display. The cards are issued by the bank or financial institution and can be sold by units by approval from OBFS Merchant Card Services.

6. Types of Gift Cards/Certificates NOT Subject to This Policy
Bank issued gift cards
Gift Cards/Certs issued for food products
Gift Cards/Certs distributed directly to a recipient by issuer-pursuant to an award, loyalty, or promotional program-without the exchange of any money or object of value from the recipient for the gift card/cert.
Gift Cards/Certs sold below face value at a volume discount to employers or to non-profit and charitable organization for fundraising purposes, if the expiration date of those gift card/cert is more than 30 days after the date of sale, (see OBFS Policy and Procedure Sec 8.13, Funding and Allowability of Certain Expenditures).

7. Guideline Objectives
Gift Cards/Certificate Sales as of January 1, 2008 NOT Allowed to
Sell with expiration date earlier than five years from date of issuance
Sell with a no post purchase fee or inactivity fee, such as,
non-use or untimely redemption
Who-When-How have gift cert/cards been issued?
Gift cert/card $ value issued
Expiration dates- issued-displayed on card/cert or point of purchase,
1-800, or NOT displayed
Balance inquiry-Gift Cards……
Inactivity fees/Any other service fees
POS policy displayed?
Gift cert/card sales documented in department retention files
Fiscal years Gift cert/cards have been sold, yrs ……

8. Gift Card/Certificate Compliance
Gift Cards/Certificates issued as of January 1, 2008 with or without expiration date the noted requirements must be followed:
Cannot be issued with expiration date earlier than five years after the date of sale
Expired unredeemed balances must be reported to UAFR.
Valid until presented for a purchase/service
Units must include a toll-free number for card/cert holders to call for balance inquiries
Toll-free number obtain at campus telecommunication support services
Exp Date with 5 yrs or more or no expiration date

9. Gift Card/Certificate Compliance
Gift Cards/Certificates issued as of January 1, 2008 with or without expiration date the noted requirements must be followed:
No post purchase fee or any other fee can be charged by the units for gift card/cert sales
Face value cannot be reduced and no penalties for non-use or untimely redemption.
No sales tax can be charged at time the gift card/cert is sold. Sales tax is applied when used at the time of purchase.

10. UAFR Unclaimed Property Reporting
Gift cards/certificates issued before January 1, 2008:
Unredeemed balances that have expiration date must be reported to UAFR.
Units must provide toll free phone number for card/cert holders to inquire about balances.
If inactivity fees were initiated, units must display a sign explaining clearly that a fee will be charged for inactivity,
Amount of fee to be charged
How often and circumstance the fee will be applied

11. What’s Unclaimed property?
Definition:
Abandoned property, unclaimed by its rightful owner
Purpose:
To reunite lost owners with their property
To protect the holder from subsequent claims by owners
To ensure that any economic windfall benefits the state and its citizens
Example:
Unclaimed wages, payroll checks
Annuity payments, Workers Comp Benefits,
Vendor payments, Royalties
SAR/GAR Balances, customer deposits
credit checks or overpayments, unidentified remittances
Estates, Pension Benefits, Gift certificates

12. Unclaimed property - Common Terminology
Dormancy Period – Over period of time property remains inactive
Holder – Entity in possession of property
Owner – Individual or entity entitled to the property
Due Diligence – Holder must attempt to contact owner prior to remitting property to state
Custodian – Most states act as custodian for true owner

13. Unclaimed Property Reporting to State of Illinois
The process of turning the property to the State is called Escheat. Our Unclaimed Property report is filed with State of Illinois each year in October.
$16.8 million dollars have been collected for unclaimed. The oldest property is dated 7/1/1998.
More than $1 million has been turned to the State. And over $3.3 million dollars are still left in unclaimed.

14. Escheatment Process
Unclaimed Property is first escheated to the Holder when it’s over 7 months old. But the Gift Card/Cert is escheated when it’s expired.
Unclaimed Property will then be turned to the State when it reaches the dormancy period of 7 years old. (example, we are turning in FY02 unclaimed to the state in October 2009)
And the State will hold these unclaimed forever till someone claims it.

15. Check become stale dated
Process Flowchart
With Hypothetical Dates
Check become stale dated
Process replacement
Search Letters
Process replacement
Escheatment
July 1-Sept 30
1/1
7/1
8/12
8/13
9/10
12/31
1/10
7 years has past
7/1
10/15
Check or Gift Card issued
Void Stale Dated Checks
Search Letters
Units submit Expired Gift Cards/Certs
Due Diligent Letters
Submit unclaimed to the State of IL

16. Escheatment on Gift Cards/Certs
The escheatment process for checks doesn’t require units to initiate any transfers.
But the Escheatment process for Gift Card/Cert is different. Units must contact UAFR, to coordinate the transfer of funds when Card/Cert becomes expired. Units may not retain any expired funds.
Since Units are responsible to collect info when the sales were made, Units must provide any available info about the Card/Cert holder/payee to UAFR when escheatment occurred.

17. Escheatment on Gift Cards/Certs
Units need to provide:
Payee Name
Address
Gift Card/Cert number
Value of expired Cards/Certs
Date Sold
Expiration date of the Card/Cert
CFOAP account
Payment Method and any other extra descriptions you may have.

18. Questions? Thank you! Unclaimed Property Reporting Contact:
University Accounting & Financial Reporting
Tiffany Tsou
and
Gift Card/Certificate Sales Contact :
OBFS-Merchant Card Services
and
Questions, please contact us at University of Illinois Merchant Card Services and University Accounting and Financial Reporting.
Thank you!