Attorney General Letitia James Secures $4.4 Million Settlement with Card Compliant LLC
H&M and Gift Card Company Held Accountable for Misusing New Yorkers' Unclaimed Funds
New York Attorney General Letitia James
New York Attorney General Letitia James has successfully secured nearly $4.4 million from Card Compliant LLC, a gift card company, for its role in helping popular fashion retailer H&M withhold millions of dollars in unredeemed gift card balances from New Yorkers. This violation of New York law has drawn significant attention as it deprived consumers of funds rightfully theirs and circumvented state requirements.
For years, H&M failed to transfer unused gift card balances to the state’s Office of Unclaimed Funds. Instead, the retailer used an agreement with Card Compliant to make it appear that the Kansas-based company was managing its gift card business. In reality, H&M retained control of the gift card program, making it legally obligated to turn over unredeemed balances to New York.
In May 2022, Attorney General James secured a $36 million settlement from H&M for withholding these funds. With today’s agreement, Card Compliant will pay an additional $4.4 million to the state.
“Consumers should know that when they buy gift cards, the money on the card belongs to them,” said Attorney General James. “For years, Card Compliant and H&M knowingly disregarded the law and lied to the state and consumers, lining their own pockets with gift card funds that belonged to New Yorkers. My office will continue to protect New Yorkers’ wallets and go after any company that attempts to cheat them.”
H&M sells gift cards for use in both its retail and online stores. Some portion of these gift cards remains unredeemed each year, creating balances that New York law requires to be transferred to the Abandoned Property Fund after five years of inactivity.
The Office of the Attorney General (OAG) began investigating H&M in 2016 after a whistleblower filed a lawsuit under the New York False Claims Act. The investigation uncovered that H&M knowingly failed to transfer unredeemed funds and used its agreement with Card Compliant to misrepresent its compliance with state laws.
In 2011, New York’s Comptroller’s Office raised questions about the contract between H&M and Card Compliant. Rather than disclose the truth, Card Compliant advised H&M to withhold contract details and prepared a letter with false statements to mislead the Comptroller’s Office. The letter falsely claimed that Card Compliant had paid out millions in gift card redemptions, despite lacking the resources to do so.
The settlement resolves allegations that Card Compliant knowingly provided false statements to the Comptroller’s Office and advised H&M to do the same. Under the agreement, Card Compliant will pay $4.37 million to New York state, including more than $1 million awarded to the whistleblower.
The investigation was led by Assistant Attorney General Laura Jereski of the Taxpayer Protection Bureau, with support from Legal Analyst Iuliia Belyshkina. The Bureau, under the leadership of Chief Thomas Teige Carroll and Deputy Chief Scott J. Spiegelman, operates within the Division for Economic Justice, led by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.