Class Sues American Express Over Gift Cards

BROOKLYN (CN) - American Express sells gift cards with "secret" restrictions in tiny type, with more restrictions listed inside sealed envelopes that cannot be opened until purchased, and so fails to properly inform purchasers of fees that reduce the cards' value, a class action claims in Federal Court.

On the back of the gift card, in small type, AmEx has written: "A $4.95 Card fee will be applied at the checkstand," the complaint states.

The complaint continues: "At the bottom of the sealed envelopes [in which the cards are sold], AmEx warns customers in very fine - less than 7 point - white italic print: Monthly service fee of $2.00 is waived for initial 12 months after purchase (subject to applicable law. * See back for important usage restrictions.

"On the back of the sealed envelopes, in even finer 6 point type, AmEx warns customers: For use only at U.S. merchants that accept American Express Cards. Not for use at car rentals, cruise lines, casinos or ATMs. The enclosed Cardholder Agreement includes additional terms, conditions and usage guidelines. ..."

Additional terms say that the gift package is invalid if it is opened before purchase. "Thus, 'The enclosed Cardholder Agreement (which) includes additional terms, conditions and usage guidelines' is kept completely secret from purchasers inside the sealed envelope, until after the purchaser has paid for the Gift Card and is allowed to open the sealed envelope," the complaint states.

Plaintiffs demand an accounting, disgorgement of unjust profits, an injunction and costs. They are represented by Richard Greenfield with Greenfield & Goodman.

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