Del. Whistleblower Suit Could Reshape Gift Card Programs

Overview


Stephen Kranz said a Delaware lawsuit over company gift card practices resembles suits in other states which address practices that state tax audit authorities did not flag, but that nonetheless became an issue. “Hypothetically, … defendants in Delaware went through unclaimed property audits by the state. And the state approved, or did not question, what had happened with respect to the gift card program,” Mr. Kranz said. Diann Smith added that because the Delaware suit is a qui tam action, “The involvement of a third party increases the risk to companies because in the past, as an adviser, you thought, ‘OK, we know what the government thinks, we don’t have to worry about this area.’”