The investigation, initiated by the Attorney General’s Office (OAG) following a whistleblower lawsuit, found that H&M knowingly failed to comply with regulations requiring them to turn over unredeemed gift card balances after five years of inactivity. These balances, representing the H&M gift card amount that customers paid but did not fully spend, should have been transferred to the Office of Unclaimed Funds, overseen by New York State Comptroller Thomas P. DiNapoli. Instead of complying, H&M engaged in deceptive practices to conceal their obligations.
According to the Attorney General, H&M not only withheld the funds but also actively misled the state about their gift card operations. In 2008, after becoming aware of the legal requirement to transfer unredeemed balances, H&M entered into an agreement with an out-of-state company. This arrangement was presented to the state as a transfer of their gift card business, falsely suggesting that H&M was no longer responsible for the unclaimed funds. However, the OAG investigation revealed that H&M continued to manage its gift card business internally, and the money from gift card sales remained within their accounts.
Further complicating the matter, H&M provided false information to the state on multiple occasions. They claimed that the out-of-state company had taken over the gift card business and was managing the balances. They even falsely asserted that this company had paid out millions on H&M gift cards. In reality, H&M retained control of the unredeemed gift card amounts and remained liable for honoring these cards. These misleading statements aimed to evade New York’s Abandoned Property Law and prevent the rightful transfer of funds.
As a result of the settlement, H&M will pay over $28 million to New York State, with more than $18 million specifically designated for the Abandoned Property Fund to cover unredeemed balances on H&M gift cards sold before 2015. The whistleblower who brought the case forward will receive $7.74 million for their role in exposing H&M’s misconduct. This significant penalty reflects the seriousness of H&M’s actions and sends a clear message that companies will be held accountable for legal compliance and ethical business practices concerning gift card amounts and unclaimed funds.
For consumers holding H&M gift cards issued between 2004 and 2014, there are avenues for recourse. If you possess physical gift cards with remaining balances, you can still redeem them at H&M stores or online. Additionally, individuals who believe they have unredeemed balances from this period can file a claim directly with the Comptroller’s Office of Unclaimed Funds. This settlement ensures that New Yorkers can recover the value associated with their H&M gift card amount, even if the cards have long been inactive.
This case underscores the importance of state regulations regarding unclaimed property and the responsibility of retailers to adhere to these laws. Attorney General James emphasized her office’s commitment to protecting consumers and holding companies accountable for unlawful practices. The recovery of these funds ensures that the money from unused H&M gift card amounts will be properly managed and potentially returned to consumers, rather than being unjustly retained by the retailer. The successful resolution of this case serves as a reminder to all businesses to maintain transparency and compliance in their handling of gift card programs and customer funds.
