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Court Upholds Gift Card Rules

Mall operator challenged Connecticut's ban on gift card dormancy fees

October 24, 2007

The ruling by the U.S. Court of Appeals for the Second Circuit involves a case in which Simon is challenging Connecticut's ban on gift card fees and expiration dates.

In a separate case, Connecticut Attorney General Richard Blumenthal sued Simon in state court for illegally imposing expiration dates on gift cards and charging dormancy fees on unused balances.

Blumenthal said the federal court ruling vindicates Connecticut's vital right to prevent businesses from unconscionably devaluing gift card balances - ensuring that consumers get the full product that they bought.

The federal ruling also provides for the U.S. District Court to consider the merits of Simon's challenge to Connecticut's law prohibiting expiration dates on gift cards. Blumenthal and State Treasurer Denise L. Nappier said they will continue to vigorously defend the state ban on expiration dates on gift cards.

"Common sense and law support this ruling that a gift card belongs to a gift recipient - not a mall owner," Blumenthal said. "Simon cannot devalue gift cards. This ruling protects our legal prohibition against businesses devaluing gift cards and imposing dormancy fees on gift card balances. When consumers pay in full for a product, they deserve the full value.

"Simon's gift card policies are illegal and completely nonsensical, turning off consumers, and wasting colossal amounts of money and time on litigation. Simon should spare consumers this unconscionable battle and abandon its court fight," he said.

Meanwhile, Blumenthal said he continues to pursue the state action against Simon for illegally devaluing and expiring gift cards.

Simon Property, which owns the Crystal Mall in Waterford, Connecticut, has subtracted $2.50 a month from Crystal Mall gift cards if an unused balance remains after six months. The company also has levied fees of $7.50 to reactivate an expired card.

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