NY AG Secures $4.4M Settlement with Gift Card Company Over Unclaimed Funds

New York Attorney General Letitia James announced Monday that a settlement has been reached with Card Compliant LLC, a gift card company accused of helping fashion retailer H&M illegally retain millions of dollars in unredeemed gift card balances. The agreement requires Card Compliant to pay nearly $4.4 million to the state, resolving allegations that the company knowingly violated New York law.

H&M, which sells gift cards for its retail and online stores, was found to have withheld unredeemed balances that should have been turned over to New York’s Abandoned Property Fund after five years of inactivity, as required by state law. Instead, the retailer partnered with Card Compliant to give the appearance that the Kansas-based company managed H&M’s gift card program, thereby exempting the funds from state reporting requirements.

Attorney General James said the scheme allowed both companies to improperly profit at the expense of New Yorkers.

“Consumers should know that when they buy gift cards, the money on the card belongs to them,” 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 follows a $36 million resolution with H&M in May 2022 over the same issue.

The attorney general’s investigation began in 2016 after a whistleblower filed a lawsuit under New York’s False Claims Act. Officials found that H&M entered into an agreement with Card Compliant in 2009 to conceal its obligation to transfer unredeemed gift card balances to the state.

According to the investigation, Card Compliant provided misleading statements to New York’s Comptroller’s Office, falsely claiming it had paid out millions in connection with H&M gift card redemptions. In reality, H&M maintained control of the gift card program and retained the unredeemed balances.

As part of the settlement announced Monday, Card Compliant will pay $4.37 million to New York, including more than $1 million to the whistleblower who initiated the case.

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