New York AG James Recovers Over $36 Million for Gift Card Fraud

Lori Kalani, Bernard Nash
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  • New York AG Letitia James reached a settlement with global retailer H&M Hennes & Mauritz, L.P. and whistleblower William S. French to resolve allegations that H&M improperly retained unused gift card balances that should have been transferred to the New York State Abandoned Property Fund, and falsely claimed that the funds had been transferred out of state, in violation of the state’s Abandoned Property Law (APL) and False Claims Act.
  • According to the Stipulation and Settlement Agreement, beginning in June 2008, H&M learned that the APL required it to transfer millions of dollars in unused gift card balances to the Abandoned Property Fund after five years of inactivity. Rather than transferring the funds as required, H&M sought to avoid having to transfer the balances to the Abandoned Property Fund by contracting with an Ohio company and then falsely claimed to the State that the Ohio company, which was not subject to the APL, held the gift card liabilities In reality, H&M retained control of the gift card proceeds.
  • Under the terms of the settlement, H&M will pay the state $28,260,000, approximately $18 million of which will go to the Abandoned Property Fund. French, the whistleblower, will receive $7,740,000 for alerting the AG to H&M’s misconduct.
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