New York Attorney General Letitia James announced a settlement with Card Compliant LLC, a gift card company involved in allowing fashion giant H&M to keep millions of dollars in unused gift card funds, violating state law. As part of the settlement, Card Compliant will pay nearly $4.4 million to the state. This follows a May 2022 settlement in which H&M was required to pay over $36 million for the same violation, as per a release on the Office of the New York State Attorney General website.
Investigators found that, contrary to its claims, H&M did not transfer dormant gift card balances to the state's Office of Unclaimed Funds after five years of inactivity, as required by New York law. Instead, H&M made it appear that Card Compliant, based in Kansas, handled their gift card operations to avoid state regulations. "Consumers should know that when they buy gift cards, the money on the card belongs to them," Attorney General James stated on the same release.
The case began with a whistleblower lawsuit under the New York False Claims Act in 2016, leading to an investigation into H&M's gift card practices. It was revealed that H&M and Card Compliant had a deceptive agreement, with Card Compliant helping H&M conceal the scheme and providing the New York Comptroller’s Office with misleading statements that falsely inflated the extent of their gift card redemptions.
Card Compliant's actions were a deliberate effort to deceive and avoid the requirement to transfer unredeemed gift card balances as required by New York law. The settlement includes over $1 million for the whistleblower who exposed the issue.
The investigation was led by Assistant Attorney General Laura Jereski, with support from the Taxpayer Protection Bureau under Senior Enforcement Counsel Bryan Kessler.
