NYS Attorney General Wins $4.4M Settlement with Gift Card Company Over Unclaimed Funds

New York Attorney General Letitia James has secured a $4.4 million settlement with Card Compliant LLC, a gift card company accused of aiding fashion retailer H&M in unlawfully retaining millions of dollars in unclaimed gift card balances. The settlement resolves allegations that Card Compliant knowingly violated state laws governing unredeemed gift card funds.

State law requires unclaimed gift card balances to be turned over to New York’s Abandoned Property Fund after five years of inactivity. However, the attorney general’s investigation revealed that H&M worked with Card Compliant to sidestep this obligation. Under the scheme, H&M appeared to transfer management of its gift card program to Card Compliant, a Kansas-based company, in an attempt to evade state reporting requirements.

“Consumers should know that when they buy gift cards, the money on the card belongs to them,” Attorney General James said in a statement. “For years, Card Compliant and H&M knowingly disregarded the law and lied to the state and consumers, lining their own pockets with gift card funds that belonged to New Yorkers.”

The settlement, announced Monday, follows a related $36 million resolution with H&M in May 2022. The investigation began in 2016 after a whistleblower filed a lawsuit under New York’s False Claims Act. According to findings, H&M partnered with Card Compliant in 2009 to obscure its obligation to transfer unredeemed balances to the state. Card Compliant reportedly submitted misleading statements to the New York State Comptroller’s Office, falsely claiming it had paid out millions related to H&M gift card redemptions. In reality, H&M retained control of the program and the unclaimed funds.

Under the terms of the settlement, Card Compliant will pay $4.37 million, including more than $1 million allocated to the whistleblower who initiated the case. The settlement underscores the state’s commitment to enforcing consumer protection laws and holding companies accountable for deceptive practices.

The case was handled by Assistant Attorney General Laura Jereski of the Taxpayer Protection Bureau, with support from Senior Enforcement Counsel Bryan Kessler. The Taxpayer Protection Bureau operates within the Division for Economic Justice, overseen by Chief Deputy Attorney General Chris D’Angelo.