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December 30, 2008
Connecticut AG Blumenthal to settle gift card ripoff suit with recalcitrant mall owner Simon
Attorney General Richard Blumenthal today announced that the owners of the Crystal Mall in Waterford will pay $308,736 -- mostly for refunds to thousands of consumers -- to settle allegations that they violated the state ban on gift card inactivity fees. Norwich (CT) Bulletin. Along with the Consumers Union and others (previous blog), we have been fighting against the incredibly shrinking gift card--laden with fees and even subject to losses due to retailer bankruptcies. Give your nephew a card worth $50, and each month after the first year it declines by $2.50, just like a low-balance bank account, unless subject to stronger state law (Consumers Union list). While the settlement is important for its restitution to aggrieved consumers, Blumenthal's release notes that with the blessing of the pliant Treasury agency known as the OCC (our archival site OCCWatch), which allows its regulated national banks to charge any and all fees, mall owners such as Simon are now using a loophole and issuing gift cards under cover of a national bank charter:
Now, the company's actions would be beyond the state law enforcement because it has shifted to cards issued through a national bank, deemed subject only to federal law. [...] Simon is now issuing gift cards through two national banks, MetaBank and U.S. Bank, to circumvent Connecticut's ban on dormancy fees. Because they are national banks, their cards are governed by federal law, which allows dormancy fees. Simon is charging $2.50 a month on cards 13 months and older. Under the new administration, we expect new leadership at the OCC that will rescind this unfair rule, if the OCC is not dismantled and replaced with a regulator that actually protects consumers, that is. More from Consumers Union. Our advice--give presents or give cash. Don't buy gift cards. The bank cards have outrageous fees; the retailer cards could become worthless due to bankruptcy.
Posted by Ed Mierzwinski at December 30, 2008 05:49 AM
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