Unclaimed Property Litigation:
Simon Property, L.P. & SPPGC, Inc. v. Numerous State Officials
This series of litigations involve the gift card issued by SPPGC and sold at Simon Property's numerous malls. The card is co-branded by Simon and Visa, with Bank of America as the issuer. The cards contain an expiration date and impose service fees.
The states have claimed that the fees and expiry violate their respective consumer protection statutes. Simon Group & SPPGC responded that the card isn't really a gift card, but it is a bank card. Bank cards, they argue, are not subject to state regulation.
If that argument is effective, the fees and expiry may continue until Congress enacts federal legislation. Bank cards, like other baking products, e.g. savings account, official checks, are not exempt from escheat. Simon may find that it pays more in escheat than it collects in the enforcement of the expiration dates and fees.
Ironically, if the states succeed in their argument that this product is truly a gift card, the "breakage" will not be escheatable in those states which have exempted gift certificates and cards.
Young America v. Affiliated Card Services
Young America provides rebate "fulfillment" services for numerous retailers: it manages the rebate process. Over the years, a large dollar volume of uncashed checks have accumulated. Forty-one states, notified Young America of its selection for audit and advised that ACS would serve as the auditor.
Young America sought an injunction. It claimed that ACS lacked authority to enforce an involuntary audit. It alleged that the proposed action cast a "pall" on its business relationships with the retailers.
The district court found that ACS has not exceeded its authority, for it only announced a pending audit. The court also concluded that Young America's complaint did not adequately allege any "imminent injury."
Young America appealed this decision to the Eight Circuit Court of Appeals. However, the Eight Circuit upheld the district court's ruling.While this litigation suggests some apparent tactical errors by counsel, the significance of this case is that the state's use of a common collection agent to pursue this unusual category of intangible property. Clearly the anticipated sum must have been very large to initiate and sustain this effort.
