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UPDATE: Spitzer Joins Questionable Action Against Simon

SimonNew York state Attorney General Eliot Spitzer has joined Massachusetts, Connecticut and New Hampshire with a lawsuit against mall owner Simon Property Group Inc., charging that Simon's gift-card program violates a state law which prohibits monthly service fees on gift cards until the card has been unused for 12 months.

I'm wondering if Spitzer, et. al are barking up the right tree. For a while, retailers benefited from unpaid balances on gift cards in much the same way as long-distance companies benefited from the expiration of long-distance minutes on calling cards, which was allowed rather than carrying the value of unexpired minutes on their books. In comparison, Simon's program is no different than a bank, who are infamous for charging seemingly predatory fees for low account balances or service charges.

Since Simon is not a retailer, it must support the card and all of its administrative costs through the fees generated by the card. If Spitzer is going to go down this path, I think he needs to first look at fees charged by the banking industry before targeting Simon.


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