MGM Class Action Says Gift Cards Sold at Costco Subject to Illegal Fees

MGM Resorts International and Costco Wholesale Corporation are facing a class action lawsuit alleging they sold and issued gift cards intended for use at MGM hotels, resorts and casinos without providing the required pre-sale disclosures, and imposed unlawful fees on consumers who bought the MGM gift cards.

Plaintiff David Hanson claims that he purchased 140 MGM gift cards from a Costco store in Seattle in March 2015.

According to the class action lawsuit, the MGM gift cards included statements indicating that a “monthly Inactivity Fee will be assessed eighteen months from March 2015 on cards showing no activity” and that a “monthly maintenance fee of $2.50 will be deducted from your card balance after eighteen months of no activity from the date printed on the front of the card.”

Hanson says that he read these statements prior to purchasing the MGM gift cards and therefore believed that he would not be subject to any inactivity fees for at least 18 months of inactivity from March 2015.

Despite these representations, Hanson was assessed an inactivity fee of $2.50 just 12 months after he purchased the MGM gift cards from Costco, the MGM gift card class action lawsuit alleges. Further, Hanson says he continues to have the substantial and unlawful inactivity fee assessed against him each month.

According to the MGM gift card class action lawsuit, state and federal laws require sellers of gift cards to provide consumers with certain disclosures about their rights, obligations and any fees that are associated with the gift cards. These disclosures must be made prior to purchase.

“Those required disclosures include, inter alia, applicable inactivity fees—including the amount, frequency, and conditions that must be met before such fees can be levied against the purchaser of a gift card,” the MGM gift card class action lawsuit states. “Here, the MGM Gift Cards sold by MGM and Costco failed to provide the accurate presale disclosures required by State and federal laws—and went so far as to misrepresent what terms they were actually controlling.”

By filing the MGM gift card class action lawsuit, Hanson seeks to represent himself as well as a Class of consumers who purchased an MGM gift card within the last six years and had an inactivity fee assessed on the gift card prior to the expiration of the inactivity period that was stated on the face of the MGM gift card.

Hanson also seeks to represent subclasses of consumers who purchased the MGM gift cards from Costco as well as a Nevada subclass and a Washington subclass.

The MGM gift card class action lawsuit asserts claims for breach of contract, violation of the Electronic Funds Transfer Act, violation of Washington’s Consumer Protection Act, violation of the Nevada Deceptive Trade Practices Act and breach of express warranty.

Hanson is represented by Kim D. Stephens and Kevin A. Bay of Tousley Brain Stephens PLLC; Rafey S. Balabanian, Eve-Lynn Rapp and Stewart Pollock of Edelson PC; and Alexander Darr of Darr Law Offices.

The MGM Gift Card Class Action Lawsuit is David Hanson v. MGM Resorts International, et al., Case No. 2:16-cv-01661, in the U.S. District Court for the Western District of Washington, Seattle.

UPDATE: September 2018, the Costco, MGM gift card fees class action settlement is now open. Click here to file a claim.