New York Attorney General Letitia James announced early Thursday that fashion giant H&M will pay $36 million to settle accusations that they illegally kept millions of dollars in gift cards that customers never used.
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The Swedish company, whose full name is H&M Hennes & Mauritz AB, will pay $28.26 million to the state and $7.74 million to a whistleblower, William French.
James stated H&M has since at least 2008 withheld unused gift card balances that it should have transferred to the state’s so-called Abandoned Property Fund.
She also claimed H&M repeatedly lied about the missing transfers by saying an out-of-state company, which had no obligation to send unused balances to New York, was handling its gift cards business.
“My office has zero tolerance for companies that disregard the law and line their pockets with money that belongs to hardworking people,” said Attorney General James. “For years, not only did H&M illegally keep unused gift card money that customers paid for, but they then lied about it to the state. Violating the law is not trendy or tolerable, and today H&M will pay millions of dollars for its wrongdoing. New Yorkers can trust that my office will always stand up to unscrupulous companies and hold them accountable.”
“New Yorkers with unused balances on their H&M gift cards now can recover their money under today’s agreement,” said New York State Comptroller Tom DiNapoli. “The Comptroller’s Office of Unclaimed Funds stands at the ready to assist those who have money coming to them. I thank Attorney General Letitia James and her office for their work to help my office hold companies accountable and ensure that unused gift card money goes to the consumer.”
H&M did not admit or deny wrongdoing in agreeing to settle.
The agreement resolves allegations that H&M knowingly made false statements to DiNapoli’s office to avoid turning over the unused balances on gift cards to the Abandoned Property Fund. As part of the agreement, H&M will pay more than $28 million to the state, of which more than $18 million will go to the Abandoned Property Fund for unredeemed balances on H&M gift cards sold before 2015. The whistleblower, French, will receive $7.74 million for bringing H&M’s misconduct to light.
Consumers who have unused funds in gift cards issued between 2004 and 2014 can either use the card at H&M, if they still have the physical card, or file a claim for the unredeemed balance with the Comptroller’s Office of Unclaimed Funds.
Daniel Miller, of Walden Macht & Haran, lead counsel representing the whistleblower Mr. French said of the settlement:
“I am very proud of this case. To my knowledge, this is the most successful qui tam whistleblower escheat action in the history of the United States. Piecing together what happened here required extraordinary effort over a period of many years. The taxpayers of New York State should be thankful to both Mr. French and the New York Attorney General’s Office, and in particular, Assistant Attorney General Laura Jereski. Their work to reach this outcome was phenomenal. Further thanks are due to our co-counsel, David Koenigsberg and John Menz, of Menz Bonner Komar & Koenigsberg LLP.”
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