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Commonwealth v. Simon
Property Group, Inc., 2008 WL 4965853
(Mass. Super. Oct. 27, 2008) (Fabricant, J.). |
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In an action brought by the Attorney
General against a shopping mall operator, the court held
that a “Simon Visa Gift Card” was not a gift card, at
least not within the meaning of the applicable
Massachusetts statute. As long as this decision is the
law, Massachusetts merchants may want to explore
third-party vendor arrangements for their gift cards,
which simple device will apparently divest them of
responsibility for compliance with the Massachusetts
Gift Certificate Statute, M.G.L. ch. 200A, § 5D.
Between March 2003 and August 31, 2005,
Simon Property Group, Inc. (“Simon”) sold Visa Gift
Cards, which could be used like a debit card at any
location that accepts Visa cards, even if unaffiliated
with Simon. The cards carried “dormancy fees” if they
still carried a balance after six months, and “reissue
fees” if the card was retained beyond the twelve to
fifteen month “expiration” date.
The Attorney General commenced an action
under the Massachusetts Gift |
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Certificate Statute and M.G.L. ch. 93A.
The Gift Certificate Statute requires that gift
certificates be valid for at least seven years after
issuance. The Attorney General argued that the fees
violated the statute, were not properly disclosed, and
were unfair trade practices.
The statutory definition of “gift
certificate,” however, applies only if the certificate
is to be used “in lieu of cash in exchange for goods or
services supplied by the seller.” Because the
Simon Visa Card was usable to purchase goods and
services from vendors other than Simon, the court held
the statute did not apply. The court reasoned that the
statute was intended to prevent merchants from accepting
advance payment and retaining the money advanced but
failing to provide the goods or services. Accordingly,
where the seller of the gift card differs from the
seller of the underlying goods and services, the
Massachusetts statute does not apply.
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