Texas AG Wants RadioShack Gift Card Holders First in Line (June 22, 2015)
Texas Attorney General Ken Paxton has filed a lawsuit against bankrupt RadioShack Corp. to help ensure consumers in the state receive their collective $43 million in unredeemed gift cards. The lawsuit, filed in U.S. Bankruptcy Court for the District Of Delaware, also asserts that consumers should receive priority status over other creditors.
The lawsuit claims that, according to RadioShack’s policy, gift cards do not expire. With the company’s Chapter 11 bankruptcy filing earlier this year, consumers’ only recourse is to file a proof of claim in the case; however, RadioShack has not made any effort to provide consumers with notice of the filing or any deadlines, according to the lawsuit.
Texas contends that it has standing to file a proof of claim on behalf of its residents for such funds and that consumer claims for unredeemed RadioShack gift cards are given priority over lenders when the company finally liquidates. Gift card holders were at the back of the creditor line when Sharper Image filed bankruptcy in 2008 and Borders followed in 2011. In both cases, consumers were not guaranteed the full, if any, amount of their unused gift cards. However, a successful lawsuit has required Sharper Image to pay nearly $20 million to gift card holders.
RadioShack asserts it doesn’t know who the holders of unredeemed gift card holders are or how to contact them, according to the lawsuit. “However, Texas respectfully contends that such an assertion must be viewed with some skepticism in light of the fact that the defendants maintain extensive data regarding their customers’ purchases. The defendants likely know the names, mailing addresses and email addresses of at least some of the purchasers if not the holders,” the lawsuit says. Retailers generally do not collect personal data on gift card purchasers or the ultimate recipients unless they register their cards to facilitate online shopping. In fact, personal data collection at the POS was a major concern for the industry with N.J.’s escheat law reforms. Ultimately, N.J. Governor Chris Christie (R) on Feb. 5 signed into law S 2235/A 3480, which eliminated the requirement to collect consumer ZIP codes for gift cards purchased at the POS.