Attorney General Kelly A. Ayotte announced today that the Attorney General’s office has sued Simon Property Group, the manager of the Rockingham Park Mall in Salem, the Pheasant Lane Mall in Nashua, and the Mall of New Hampshire in Manchester for violations of the Consumer Protection Act.

The complaint, filed today in the Merrimack County Superior Court in Manchester alleges that Simon Property Group sells gift certificates which bear expiration dates, and which allow the deduction of service charges or dormancy fees. New Hampshire law states that gift certificates may not expire, and that such service charges, dormancy fees, or other administrative charges that reduce the value of the gift certificate are forbidden.

Attorney General Ayotte explained that under New Hampshire law, these gift cards are legally considered gift certificates, and as such, they must conform to New Hampshire requirements. The Consumer Protection and Antitrust Bureau has received approximately ten complaints from New Hampshire consumers relating to these cards, according to Attorney General Ayotte.

If you hold on to one of these cards for more than six months, Simon charges $2.50 each month from then on, and after a year, it expires, Attorney General Ayotte said. After it expires, you have a year to reinstate it, but Simon charges another administrative fee of $7.50 to do so, and they subtract that fee from the remaining value of the card. All this is contrary to the Consumer Protection Act, the Attorney General explained.

For example, a gift card with a face value of $25.00 is likely to be worth significantly less by the time it is redeemed, Attorney General Ayotte said. If it has not been used, after one year the gift card will be worth only half of its original value. Also, it will expire. If the consumer chooses to reactivate the gift card, the card that was once worth $25.00 would only be worth $2.50. The graph shows what happens to the value of the gift card.

“As you can see, it does not take long for the gift card to become functionally worthless,” Attorney General Ayotte said. “And keep in mind that the purchaser paid $25.00 for this card that is now only worth $2.50. Also, Simon imposes a handling charge that can be anywhere from $1.50 to $17.50 depending on where and how the card was purchased. So, the consumer pays $25.00 plus handling for the card, and in a year it is worth $2.50, or it has expired altogether.”

Attorney General Ayotte went on to point out that there may be other gift cards on the market which also charge similar fees. “Our office recommends that consumers be sure to read the terms and conditions before purchasing any gift card. As the holiday gift buying season approaches, it is especially important for consumers to be aware of these issues.”