Lawsuits involving gift card fees have been increasing across the nation according to a report in the National Law Journal. According to the report, these lawsuits are hitting a multibillion-dollar industry that up until the current economic meltdown has enjoyed huge success. Gift-card spending has soared during the past five years, from $17.2 billion in 2003 to $24.9 billion in 2008.
The lawsuits are questioning dormancy fees (extra fees that are charged if the card isn’t used within 12 months), defunct retailers like Sharper Image that have not honored gift cards, and companies that are refusing to honor low balances on the cards. The cases challenge companies that continue to take advantage of consumers. A similar lawsuit in the Massachusetts courts was dismissed by a judge who 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 (see Simon mall gift cards not subject to certificate statute).
Some states have passed legislation to aid consumers in this area. According to Chicago-based Winston & Strawn, which tracks the legislation, 11 states prohibit fees on gift cards. They are Connecticut, Florida, Hawaii, Kentucky, Minnesota, Montana, New Hampshire, New Mexico, Rhode Island and Vermont. Thirteen other states limit fees on gift cards, including New Jersey, New York, Ohio and Texas. Nine states prohibit expiration dates, including California, Connecticut, Florida and Washington. As we reported recently, the Massachusetts legislature took an anti-consumer stance, however, by offering greater protection to gift card issuers (see Simon mall gift cards not subject to certificate statute).
We trust that consumers will continue to fight this unjust enrichment, and that someday, they will get what they pay for, and merchants will honor their bargains.
Roy Law 