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Consumer

Lawyer: Toys ‘R’ Us Owes Consumers $23M For Gift Cards

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(credit: TIM SLOAN/AFP/Getty Images)

(credit: TIM SLOAN/AFP/Getty Images)

LOS ANGELES (CBS) — Alleging that millions of consumers statewide were
defrauded by the Toys “R” Us gift card policy concerning cash redemptions, a lawyer urged a judge on Monday to find that the retailer did not comply with the law and award damages.

“This was the merchant’s version of, `If they don’t ask, we don’t tell’ policy,” lawyer Bruce A. Armstrong said during final arguments before Los Angeles Superior Court Judge Kenneth R. Freeman.

Armstrong and the other lawyers for the plaintiffs contend up to eight million consumers identified through scientific surveys are collectively entitled to damages of nearly $23 million.

But Gregory T. Parks, on behalf of Toys “R” Us, said the company complied with the law and urged Freeman to rule against the plaintiffs. He said that contrary to the plaintiffs’ assertions, his clients did not have to provide a cash redemption to customers with low balances on their cards unless it was requested.

“There is no evidence anyone in this class was harmed by this conduct,” Parks said.

Freeman heard testimony in the non-jury trial in September and took the case under submission after hearing closing arguments. He did not indicate when he would rule.

The lead plaintiffs are Cindy Maxwell and Audrey Miranda, who filed their suit against the retailer in November 2008. Their lead attorney, Derrick F. Coleman, said the class encompasses consumers who allegedly were not allowed to redeem their Toys “R” Us and Babies “R” Us gift cards when the balances went below $10, as required by a state law.

Those within the statewide class are consumers who bought, received or possessed the cards from Jan. 1, 2008 — when the law went into effect — to the present.

Maxwell was twice prevented from redeeming her gift card for cash at the Toys “R” Us store in Torrance, according to the plaintiffs’ court papers.

Miranda, believing wording on the back of her card prevented her from redeeming her card for cash, made a purchase at a San Diego-area store she otherwise would not have done in order to avoid losing what remained on her card, her court papers state.

Armstrong argued “Toys “R” Us did not want consumers to know about the cash redemption requirements.

“Cash-back is the only way they don’t make money on gift cards,” Armstrong said. “They want to keep that quiet.”

The plaintiffs’ lawyers have dropped their demand for $69 million in punitive damages.

Parks argued the company has not misled customers and that more than 55,000 gift cards have been redeemed for money since January 2008. That’s a large increase compared to before the law went into effect, the attorney said.

Parks said the plaintiffs’ lawyers also have not explained how any damages awarded would be dispersed to the consumers.

(©2010 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

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