Spitzer And Mall Operator Reach Agreement Over Gift Card Fees

General Spitzer today announced that Simon Property Group Inc. has settled a lawsuit by agreeing to comply with New York’s gift card law.

"This settlement recognizes that consumers are entitled to receive the full protection of the law with regard to monthly fees and important disclosures about gift card terms and conditions," Spitzer said. "I am pleased that Simon has recognized the importance of complying with New York’s gift card law."

Simon Property Group Inc. - the nation’s largest shopping mall chain - operates ten retail shopping malls and outlet centers on Long Island, and in the Hudson Valley, Central New York and Western New York. Simon had been issuing cards that would impose a $2.50 monthly "administrative fee" on all gift cards beginning in the seventh month after purchase.

In a lawsuit filed in Manhattan State Supreme Court four weeks ago, Spitzer alleged that Simon’s assessment of a monthly fee on gift cards violated a recently enacted state law that bans monthly service fees on gift cards until the card has been unused for twelve consecutive months.

New York State’s gift card law took effect on October 18, 2004 and applies to all cards purchased after that date.

In settling the Attorney General’s lawsuit, Simon has agreed to comply with New York’s gift card law and not to assess a service fee on any card unless it has been unused for twelve consecutive months.

Simon also has agreed to comply with New York’s law that requires it to disclose on its gift card the five dollar fee it charges to replace a lost or stolen card, and the $7.50 fee it charges to reissue an expired card. These fees are not prohibited by law, but must be conspicuously disclosed on the card itself.

As part of the settlement, Simon has agreed to pay to the state $100,000 in penalties and $25,000 in costs.

Senator Charles J. Fuschillo, Assemblymember Audrey Pheffer and Senator Dean Skelos, the legislative sponsors to the state law, praised the Attorney General’s settlement.

State Senator Charles J. Fuschillo: "As a sponsor of New York State’s gift card laws, I applaud the settlement that Attorney General Spitzer has negotiated. This is a great victory for our consumers and will show all gift card providers that they must abide by the laws of this state if they wish to do business here."

Assemblymember Audrey Pheffer: "I am pleased that Simon Property Group has recognized the importance of New York’s consumer protection laws regarding service fees assessed against gift certificates and has agreed to come into compliance with the statute. The Attorney General’s quick resolve should further guarantee to the public the importance that New York State places on consumer protections."

State Senator Dean Skelos: "Last year, the State Legislature enacted stringent new measures developed by Senator Fuscillo and I protecting gift cards purchasers from hidden fees that erode the gift card’s value. Unfortunately, the Simon Property Group chose to flout this new law by assessing prohibited administrative fees and replacement charges. I applaud Attorney General Spitzer’s aggressive prosecution of the Simon Group and his successful resolution of this matter for the people of New York State.

The retail shopping centers owned and operated in New York State 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 with complaints about gift cards are encouraged to contact the Attorney General’s consumer help line at (800) 771-7755.

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

Attachments:

• Consent Order and Judgment.pdf
  

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