Mall Operator Sued For Gift Card Fees

Attorney General Spitzer today announced that his office has filed a lawsuit against the owner of several prominent shopping centers for violating the state's restrictions on fees on gift cards.

Simon Property Group Inc. - which operates ten retail shopping malls and outlet centers on Long Island, and in the Hudson Valley, Central New York and Western New York - was served with a lawsuit, which was filed in Manhattan State Supreme Court, alleging that fees on its "Simon Giftcard" violate a recently enacted state law.

"The gift card law was enacted to protect consumers against hidden and unwarranted fees that diminish the balance of gift cards," Spitzer said. "Those who violate this important consumer protection law will face vigorous prosecution by my office."

The legislative sponsors to the state law, Senator Charles J. Fuschillo, Assemblymember Audrey Pheffer and Senator Dean Skelos, praised Spitzer's lawsuit.

Senator Charles J. Fuschillo Jr.: "The actions taken by Attorney General Spitzer in response to the request Senator Skelos and I made for an investigation as to whether or not the Simon Property Group was violating New York's gift card law are appreciated. When we amended the law, the intent was to ensure that consumers would receive the full value of gift card purchases and that their rights would be fully protected. I applaud the Attorney General for his actions today."

Assemblywoman Audrey Pheffer: "After extensive research on the sale and usage of gift cards, my colleagues and myself agreed that the laws passed in 2004 were enacted with consumers as well as businesses in mind, addressing concerns from both sides. It is important that Simon's disregard for these laws is addressed so that the public recognizes the importance that New York State places on consumer protection."

Senator Dean Skelos: "Last year, Governor Pataki and the State Legislature took aggressive steps to protect gift card purchasers from hidden fees that prevent them from getting what they paid for. I commend Attorney General Spitzer's decision to prosecute the Simon Group for illegally charging consumers administrative fees' and other costs that clearly violate both the spirit of the law and its express provisions."

At its shopping malls and on its website, Simon promotes and sells pre-paid gift cards. It charges a fee of $1.50 for each card if purchased at its malls or $5.95 for "shipping and handling" if purchased on the Internet. In addition, Simon charges a $2.50 monthly "administrative" fee commencing in the seventh month after purchase; a 50 cent fee for each telephone balance inquiry; a $5 fee to reissue a lost or stolen gift card; and a $7.50 fee to reissue an expired card.

The Attorney General's lawsuit charges that Simon's assessment of a monthly administrative fee on gift cards purchased after October 18th, 2004 violates the state law that bans monthly service fees on gift cards until the card has been unused for twelve full months.

Spitzer's office also alleged that Simon is violating another provision of the law by assessing a $5 fee to replace a lost or stolen gift card without conspicuously disclosing that fee on the gift card itself.

The retail shopping centers owned and operated by Simon include: Roosevelt Field in Garden City (Nassau County); Mall at The Source in Westbury (Nassau County); Walt Whitman Mall in Huntington Station (Suffolk County); Smith Haven Mall in Lake Grove (Suffolk County); The Westchester in White Plains (Westchester County); Jefferson Valley Mall in Yorktown Heights (Westchester County); Nanuet Mall (Rockland County); Woodbury Common Premium Outlets in Central Valley (Orange County); Waterloo Premium Outlets in Waterloo (Seneca County); and Chautauqua Mall in Lakewood (Chautauqua County).

Individuals wishing to file a complaint about gift cards are encouraged to contact the Attorney General's office by calling his consumer help line at (800) 771-7755 or by visiting his web site at www.ag.ny.gov.

This case is being handled by Assistant Attorneys General Geneva M. Johnson and Shirley Stark of the Consumer Frauds and Protection Bureau.

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