Home Depot has agreed to pay $750,000 to settle a civil lawsuit filed by several California district attorneys over violations of a California consumer law requiring the redemption of company gift cards with balances of less than $10.
In a July 10 press release, Los Angeles County District Attorney George Gascón outlined the terms of the resolution of the lawsuit filed in Los Angeles County Superior Court. The settlement, which was signed by Judge David Cunningham III on July 2, calls on the home improvement retailer to take multiple steps to resolve a dispute over gift card compliance with provisions of the state Business & Professions Code.
“This law exists to safeguard the rights of hardworking individuals who may find themselves in need of the money they paid, especially during challenging times,” Gascón said in a prepared statement. “It is unacceptable for any entity to disregard such crucial legal protections, and our office takes allegations of consumer rights violations very seriously.”
Home Depot did not admit any wrongdoing in the settlement, and a spokesman stressed that the company respects the rule of law.
“We follow all local laws and regulations,” spokesman George Lane said in an email to the Southern California Record. “We’ve updated our training and processes to make sure we’re in compliance moving forward.”
The settlement funds are divided into $640,000 for civil penalties; $50,000 for the California Consumer Protection Prosecution Trust Fund, since it was deemed impractical to provide restitution to consumers who no longer possess their Home Depot gift cards; and $60,000 to go toward investigative costs related to the filing.
The civil penalties will be divided up among four district attorney offices – in Los Angeles, Ventura, Contra Costa and Sonoma counties – so that each receives $160,000, according to the terms of the settlement. The $60,000 in investigative costs will also be shared equally among the four offices.
Home Depot was also ordered to comply with several directives to implement the settlement within three months of its enactment date. These include reprogramming all of its cash registers in the state to automatically cash gift cards with balances of under $10, according to the settlement.
In addition, notices that Home Depot gift cards may be redeemed for cash “where required by law” must be included on the gift cards themselves and on the company’s website. Employees at California Home Depot stores must be trained to carry out the gift card redemption policy, according to the Los Angeles County District Attorney’s Office, and Home Depot customer service areas must post redemption notices for six months stating that “The Home Depot Gift Cards under $10 may be redeemed for cash.”
Both parties in the case will bear their own legal costs, Cunningham said in the judgment.
Retailer gift cards sold in the state must comply with multiple regulations, including a requirement that they not contain expiration dates or service fees, according to the California Department of Consumer Affairs. As of Jan. 1, 2008, gift certificates with cash values of less than $10 have to be redeemable in currency or with a check, the department reports.