• Foot Locker Faces Lawsuit Over Gift Card Policy
  • December 2, 2008
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • Foot Locker is defending a lawsuit in New Jersey state court that charges that the store’s gift card policies violate state consumer protection laws.

    In a lawsuit filed in late August, plaintiff Joseph Vona, who is seeking class-action status, alleges that the retail chain’s use of dormancy fees—a small fee charged to the gift card if it has not been used for a period of time—violates a state law passed in 2006.

    Foot Locker has moved to have the case transferred to federal court.

    According to court filings, Foot Locker, which also owns Lady Foot Locker, Kids Foot Locker, and Champs Sports, estimated it has sold about 50,000 gift cards in New Jersey since April 2006, when it launched the dormancy fee policy. Among the terms and conditions on the back of the card, Foot Locker states it can deduct a service fee of $1.50 per month from the value of the card for nonuse over 12 consecutive months.

    New Jersey is among a number of states that have imposed limits on dormancy fees or banned them outright. New Jersey’s Gift Card Act forbids companies from charging the fees until 24 months have passed between purchases, and limits the fees to $2 per month. The statute also requires notice of any fees to appear in at least 10-point type, a requirement Vona alleges Foot Locker has failed to meet by using significantly smaller type.