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Gift Cards Are Big Business But When Do They Turn Into Consumer Scams — Our Chicago Class Action Lawyers Bring Suit For Gift Card Fraud

Gift cards can be a big money maker for some businesses. They rely on some the gift cards going unused until they expire, in which case the company gets to keep the money spent on the gift card without having to cough up the product or service it was meant to pay for. Sometimes these gift cards go unused as a result of customers receiving them for things they don’t want, they forget about them, or they are simply too busy to use them before the expiration date, but sometimes the company influences the outcome to significantly decrease the likelihood that gift cards will be used before they expire.

According to a recent class action lawsuit against SoulCycle, the fitness chain allegedly issued class passes that expired in an unreasonably short amount of time. The consumer class action lawsuit was filed in August 2015 by the lead plaintiff, Rachel C., who alleges she was unable to use her single-class pass before it expired.

SoulCycle sells bundles of class passes that are good for a range of numbers of classes: from one to fifty. A single class pass costs $34 (with an additional $3 fee for a shoe rental) and expires after 30 days. A pass for 20 classes expires after 9 months and a bundle of 50 classes expires after a year. SoulCycle allegedly does not refund customers for any prepaid, unused classes. The lawsuit alleges this practice allows SoulCycle, which made a profit of more than $25 million in 2015, to make significant profits at the expense of its customers who are allegedly paying for classes they never get to use.

The lawsuit further alleges this practice gives SoulCycle an opportunity to profit off its popularity because classes that are offered at peak times fill up quickly. This allegedly makes it difficult for people to get into a class that fits into their schedule and increases the likelihood that they won’t get the chance to use all the classes they paid for before their class pass expires.

SoulCycle filed a motion to dismiss the consumer class action lawsuit, but that motion was denied by a California court judge who ruled that the class passes qualify as gift cards. This is significant because gift cards are subject to the federal Credit Card Accountability Responsibility and Disclosure Act (the CARD Act) and the California Gift Certificate Law. The CARD Act prohibits expiration periods shorter than five years and the California law prohibits any expiration at all on gift cards.

The judge has certified the plaintiffs as a class and the lawsuit can now progress in the courts as a class action. The consumer lawsuit is seeking refunds for all customers of SoulCycle who have been unable to use all the classes they paid for before their class passes expired.

This isn’t the first time SoulCycle has been accused of gaining profits illegally. A 2013 lawsuit alleged the company violated wage and hour laws when paying its instructors. That lawsuit was eventually settled outside of court.

Our Hoffman Estates, Illinois consumer rights private law firm handles individual and class action gift card, data breach, privacy rights, deceptive advertising, predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at DiTommaso-Lubin are proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Inverness and Palatine consumer attorneys provide assistance in data breach, privacy violation, fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases our Chicago consumer lawyers have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Wheeling and Buffalo Grove consumer protection, gift card and data breach attorneys who can assist in consumer fraud, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer, or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.  You can also call our toll free number at (877) 990-4990.