Seller Beware: Lawyer Threatens to Sue Bookseller Over Incorrectly Marked $10 Gift Certificate

In Irvine, California, the purchase of an incorrectly marked $10 gift certificate might end up costing a bookseller a lot of money -- that is, if attorney Michael Geller has his way. He recently informed Irvine Sci-Tech Books in Irvine, California, of his intent to file suit because a $10 gift certificate that he purchased for his wife had an expiration date, which is illegal in California.

On January 1, 2003, Geller purchased a gift certificate for his wife from Sci-Tech Book's Web site and requested that it state, "Happy New Year, From: Your Friends." According to John Tyson, general manager for Sci-Tech, the clerk who filled out the gift certificate mistakenly added an expiration date of January 1, 2004. "He wasn't informed," Tyson told BTW.

Just two weeks later, Tyson received a letter from Geller's law office, Geller Stewart & Foley, LLP, regarding the gift certificate. The letter noted that the bookstore had violated section 1749.5 of the civil code and threatened a class-action suit unless Tyson settled with Geller by February 20, 2003. Among Geller Stewart & Foley's numerous demands, the attorney wanted Tyson to provide them with all the gift certificates that his store sold since January 1, 1997 and to pay their office's legal fees at a rate of $325 per hour.

Coincidentally, just prior to receiving Geller's letter, Tyson said, the Orange County Register published a commentary, "Lawsuit Extortion," on January 12, 2003, which detailed a new legal trend where, in columnist Steven Greenhut's opinion, "ambitious attorneys … look to turn minor infractions of the state's consumer regulations into personal windfalls."

The piece noted that a number of California assemblymen had held a hearing in Santa Ana that gave "victims of such legal abuse the chance to relay their horror stories." One of the assemblymen mentioned in the article was Todd Spitzer (R-Orange). "I called Spitzer's office and they suggested I contact … the attorney general's office, because they were in the midst of investigating this type of issue already," Tyson said.

Additionally, Tyson was referred to a lawyer, who took the case on a contingency basis. Last week, he sent a letter to Geller noting that they would honor the gift certificate regardless of the expiration date, and is awaiting a reply from Geller's law office.

Geller's suit is just one of many similar types of lawsuits being filed in California -- under section 17200 of its unfair business practice law, which "allows private attorneys to file these lawsuits, supposedly on behalf of the public," as reported by the Orange County Register.

This case highlights the need for all booksellers to be well aware of their own state's laws in regards to expiration dates to avoid similar lawsuits, noted Jill Perlstein, director of marketing for ABA/Book Sense. "I would strongly suggest that booksellers familiarize themselves with their state laws associated with gift certificates such as expiration dates, escheatment, and lost-property rules," she explained. "This knowledge is becoming increasingly important as gift cards continue to grow in popularity and economic times remain difficult. Many news sources are reporting on investigations by legislators working to protect consumers or trying to collect unclaimed funds."

For example, laws in most states require retailers to turn over unused gift-card value as lost property, so that state officials can try to return it to consumers, as reported by The Wall Street Journal. "It should be noted that this applies to gift certificates, too," Perlstein said. Additionally, the same WSJ article noted that "at least 15 states, including California, Florida, and Massachusetts, have exempted gift cards from lost-property laws, allowing retailers to keep unclaimed money" and that in other states, such as Michigan, businesses are lobbying lawmakers to enact similar exemptions.

"This is why we are urging booksellers to educate themselves about their state's laws and to keep up with this evolving issue," Perlstein stressed. "Then, be sure that your staff is well-trained and knows how to sell, complete, and redeem gift certificates -- whether it is your own store's certificate or a Book Sense gift certificate." --David Grogan