Long Island Mall Operator Agrees To Pay Fine And Adhere To Gift Card Law Authored By Skelos And Fuschillo

Dean G. Skelos

March 07, 2005

On March 1, 2004, Simon Property Group, Inc. agreed to pay $125,000 in penalties and costs and comply with New York State’s new gift card law to settle a lawsuit filed by Attorney General Eliot Spitzer at the behest of the law’s authors Senator Dean G. Skelos (R-Rockville Centre) and Senator Charles J. Fuschillo, Jr. (R-Merrick).

The nation’s largest shopping mail chain, Simon Property Group, Inc. operates ten retail shopping malls and outlet centers on Long Island, the Hudson Valley, Central New York and Western New York, including Roosevelt Field Mall in Garden City, the Mall at The Source in Westbury, the Walt Whitman Mall in Huntington Station and the Smith Haven Mall in Lake Grove. 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.

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

On December 20, 2004, Senator Skelos and Senator Fuschillo requested that Attorney General Spitzer enforce the state ban on the assessment of certain gift card fees against the Simon Property Group. New York State’s gift card law took effect on October 18, 2004 and applies to all cards purchased after that date.

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 the recently enacted state law banning monthly service fees on gift cards until the card has been unused for twelve consecutive months. In settling the Attorney General’s lawsuit, Simon has agreed to pay to the state $100,000 in penalties and $25,000 and, in compliance with New York’s gift card law, not 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 and expired card. These fees are not prohibited by law, but must be conspicuously disclosed on the card itself.

"As a sponsor of New York State’s gift card laws, I applaud the settlement that Attorney General Spitzer has negotiated," said Senator Fuschillo. "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."