Retailer Abercrombie & Fitch Co. issued $25 gift cards during the 2009 holiday season “to customers who had purchased either $75 or $100 worth of goods,” Business Insurance reports. Although these gift cards seemed to be a way to thank customers for shopping at Abercrombie’s stores and encourage them to come back, the strategy resulted in a potentially costly consequence that might have been avoided.
Abercrombie & Fitch stopped honoring the gift cards at the end of January 2010. However, while some of the gift cards had expiration dates, some stated that they had “no expiration date.” As a result, three class action lawsuits were filed against the retailer — in Illinois, California and Ohio — alleging, among other things, breach of contract.
Abercrombie was, however, able to require its insurer to defend these lawsuits based on an “advertisers and internet liability” policy purchase from insurer Ace European Group Ltd. While Abercrombie’s insurance offers it a measure of protection, this situation shows that businesses using gift cards need to pay close attention to the terms of cards they issue.