NY Sues Simon Malls For Gift Card Fees

February 8, 2005

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New York Attorney General Eliot Spitzer has filed a lawsuit against the owner of several prominent shopping centers for violating the state's restrictions on gift card fees.

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."

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).

New Yorkers 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.oag.state.ny.us.

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