TERRY KEENAN, GUEST HOST: Welcome back.
Well, whether you bought a gift card (search) or someone’s about to give you one for this Christmas, beware. There’s a lot of fine print involved. And in the case of one mall operator, too much fine print for my next guest’s liking.
Joining us now to explain is Connecticut’s attorney general, Richard Blumenthal. He’s suing Simon Property Group (search) over its gift card practices.
And Mr. Attorney General, welcome.
What’s the problem with these gift cards? And for people who aren’t familiar with Simon Properties, they own a lot of big malls all over the country, particularly here in the Northeast.
RICHARD BLUMENTHAL, CONNECTICUT ATTORNEY GENERAL: And one of those malls is in Connecticut. There are others in Massachusetts and New Hampshire, which have joined us in this lawsuit, because Simon Properties essentially is violating the law by imposing fees called dormancy fees and expiration fees.
Dormancy fees (search) are applicable when the card is unused for more than six months. Expiration fees if it’s unused after a period of time. And both of those fees are fairly hefty: $2.50 per month for dormancy, $7.50 for expiration.
And then a variety of other fees, which are not only illegal, but even more as a matter of fundamental fairness, undisclosed, entirely untransparent to the average consumer.
KEENAN: And — so if you bought a $50 gift card and you gave it to someone and they didn’t use it for six or eight months, when they go to use it, it’s not going to be worth $50 anymore. That’s the problem. Right?
BLUMENTHAL: A lot less than $50, in fact. If they don’t use it for a number of months, it may be worth substantially less than $50. And the person buying it has no idea that they are not going to receive the full value.
KEENAN: Is this a growing problem? Because these gift cards seem to become more and more popular by the year.
BLUMENTHAL: Well, that is the key question, excellent question, that, in fact, these practices are becoming more prevalent. And our purpose here, of course, is to send a message that these practices are against our law here in Connecticut, many other state laws, and really are unfair to consumers.
So this time of year, certainly these fees, which are among the most egregious in our experience, really deserve the kind of attention they’re receiving.
KEENAN: So when you’re looking at other — other retailers, aside from Simon, they might have these features, but they’re not as egregious?
BLUMENTHAL: They may be smaller in amount. They may be better disclosed, but consumers ought to be very much aware and wary about those fees, either if the card is unused for a period of time after, say, six months, or if there are some fees when it supposedly expires, and then it has to be reactivated. Also charges for consumers to find out how much is left in the gift card.
KEENAN: There’s a charge for that, as well?
BLUMENTHAL: Exactly. And, of course, to buy the card in the first place, the $50 example that you used may require a $2.50 or $7.50 payment simply to buy the card as an administration fee, which we can understand.
KEENAN: All right. And, of course, these retailers get the money up front. You don’t get the interest.
BLUMENTHAL: They do.
KEENAN: OK, thank you. Good to have you with us. Richard Blumenthal, Connecticut’s attorney general.
Statement: Simon Property Group on the Simon Visa Giftcard (pdf)
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