Federal Appellate Court Holds That Federal Law Preempts State’s Attempt To Regulate Gift Cards Issued By National Banks And Federal Thrifts


In a major victory for the banking industry, a federal appellate court has rejected New Hampshire’s efforts to regulate the terms of stored value gift cards issued by a national bank and federal savings association, but marketed and sold by a non-bank third party. 2007 U.S. App. LEXIS 12447 (1st Cir. May 30, 2007). The Court held that “the New Hampshire [Consumer Protection Act] was preempted

as applied to products sold by national banks and thrifts.”

Simon, a major operator of shopping malls nationwide, sells at those malls stored value gift cards issued by U.S. Bank National Association, a national bank, and MetaBank, a federal savings association. In November 2004, the State of New Hampshire notified Simon that its sale of the gift

cards violated provisions of New Hampshire’s Consumer Protection Act relating to “gift certificates,”

including the prohibitions on expiration dates and the imposition of certain administrative fees. When the State threatened enforcement action, Simon filed suit in federal court seeking declaratory and injunctive relief. The State thereafter filed suit in state court. Simon moved for summary judgment in the federal action, and U.S. Bank and MetaBank sought, and were granted, leave to intervene as plaintiffs. On August 1, 2006, the district court granted the plaintiffs’ motion for summary judgment, finding that the State could not permissibly regulate the gift card products at issue. SPGCC, LLC; MetaBank; and U.S. Bank, N.A. v. Ayotte, 443 F. Supp. 2d 197 (D.N.H. 2006).

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:


Morrison & Foerster LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.