Venable partner Melissa Landau Steinman was quoted in a June 3, 2013 Law360 article on a first-of-its-kind whistleblower suit in Delaware over gift card programs. The suit alleges that retailers, restaurants and entertainment companies are illegally using third-party and captive card companies incorporated outside of Delaware to manage their programs in an effort to avoid surrendering unclaimed balances to the state.
According to Steinman, Delaware has taken an aggressive stance and its success could determine whether it pursues other actions against other companies. “To the extent that Delaware decides to try to look at companies’ gift card subsidiaries and use this case as kind of a launching pad...then the Card Compliant case is going to be a very dangerous precedent,” she said. Steinman added that companies will look closer at how their gift card programs are run since the suit became public. “There’s always been a concern that to the extent that you have a gift card subsidiary, to make sure that you are, in fact, maintaining that separately and observing the corporate formalities.”
According to Steinman, Delaware has taken an aggressive stance and its success could determine whether it pursues other actions against other companies. “To the extent that Delaware decides to try to look at companies’ gift card subsidiaries and use this case as kind of a launching pad...then the Card Compliant case is going to be a very dangerous precedent,” she said. Steinman added that companies will look closer at how their gift card programs are run since the suit became public. “There’s always been a concern that to the extent that you have a gift card subsidiary, to make sure that you are, in fact, maintaining that separately and observing the corporate formalities.”