A Superior Court judge in Massachusetts has ruled that Simon gift cards which charge fees and expire before seven years do not come within the scope of the Massachusetts gift certificate statute. The decision was issued in the case where the Massachusetts Atty. Gen. brought an action to enforce the state’s gift certificate law against the shopping mall owner that sells the cards. This decision certainly represents a disappointment to consumers and will allow the mall owner to charge its monthly “dormancy” fee against any account that retained a balance six months after issuance of the card, and a “reissue” fee for issuance of a new card when value remained in an account after the expiration date shown on the card, twelve to fifteen months after issuance.
To view a copy of the full decision by the court, click here.
Several years ago, in one of our client newsletters, we warned people about expiration dates which sapped the value of gift cards. Last year, we reported on a settlement reached by the Federal Trade Commission with Kmart about fees it was charging on gift card users (See Gift card settlement). Last month, we warned you about gift cards that lose their value when a company goes bankrupt (See post by clicking here). The Massachusetts legislature attempted to rein in bank-issued gift cards by outlawing the fees the cards depend on for a profit as reported by the Boston Globe in an April 2006 article. The text of that bill can be viewed by clicking here. The gift certificate statute was amended, but the provisions protecting consumers from these gift card practices were not enacted. In fact, the legislation which passed specifically stated that a gift certificate shall not include any electronic card usable with multiple unaffiliated sellers of goods or services. To view the complete text of the legislation amending the gift certificate statute, click here.
Despite all of this press and attempts to control the problem, the malls seem to be winning the battle and consumers will continue to bear the costs.