H&M reaches $36 mln settlement with New York over unused gift cards

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NEW YORK, May 19 (Reuters) - H&M will pay $36 million to settle accusations that the fashion retailer illegally kept millions of dollars in gift cards that customers never used, New York Attorney General Letitia James said on Thursday.

The Swedish company, whose full name is H&M Hennes & Mauritz AB (HMb.ST), will pay $28.26 million to the state and $7.74 million to a whistleblower, William French.

James said H&M had since 2008 unlawfully kept at least $18.4 million in unused gift card balances in its own bank accounts, instead of transferring them to the state's Abandoned Property Fund.

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New York law requires gift card issuers to turn over unused card balances to the fund after five years of inactivity.

James also said H&M repeatedly lied about the missing transfers by saying an Ohio company, which had no obligation to send the balances to New York, handled its gift card business.

"My office has zero tolerance for companies that disregard the law and line their pockets with money that belongs to hardworking people," James said in a statement. "Violating the law is not trendy or tolerable."

H&M, based in Stockholm, specializes in "fast fashion." It did not admit or deny wrongdoing in agreeing to settle.

The company had no comment on the settlement.

H&M has about 4,800 stores worldwide, and posted net sales of 199 billion Swedish krona ($20.1 billion) in 2021, according to its website.

French had sued H&M in 2016, accusing it of violating New York's False Claims Act.

In a statement, his lawyer Daniel Miller said taxpayers "should be thankful" for his client's efforts.

Customers with unused H&M gift cards issued between 2004 and 2014 can use them at H&M, or file a claim with New York's Office of Unclaimed Funds.

($1 = 9.90 SEK)

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Reporting by Jonathan Stempel in New York; Editing by Chizu Nomiyama, Bill Berkrot and Bernard Orr

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