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Spitzer sues Simon over gift-card terms

ALBANY, N.Y. -- New York Attorney General Eliot Spitzer is accusing the nation's largest shopping mall owner of violating a new consumer protection law by charging administrative fees on prepaid gift cards.

Spitzer filed the first enforcement action of the state law through a civil suit against Indianapolis-based Simon Property Group Inc. The company operates 10 malls and shopping plazas statewide.

Simon, which operates 14 malls in Massachusetts, including Copley Place and the South Shore Plaza, is also facing a legal challenge in the Bay State over its gift card terms.

A 2004 New York law bans monthly service fees on gift cards until the card has been unused for 12 months.

Simon Property charges a $2.50 monthly administrative fee on the cards beginning six months after it is issued, according to its website.

Spitzer also says a $5 replacement fee isn't disclosed on the firm's card as required by the law.

"The gift card law was enacted to protect consumers against hidden and unwarranted fees that diminish the balance of gift cards," he said yesterday.

In a statement yesterday, Simon Property said that, "based on the underlying facts and applicable legal standards," it was confident its card was legal.

Besides Massachusetts, New Hampshire and Connecticut also have taken similar action against the company for allegedly violating state gift card laws.

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