ALBANY, N.Y. — Simon Property Group Inc., which operates 10 shopping malls and outlet centers in New York state, was hit with a lawsuit by Attorney General Eliot Spitzer on Friday for violating the state’s restrictions on fees on gift cards.

The case, which was filed in Manhattan State Supreme Court, alleges that fees on its “Simon Giftcard” violate the state’s law that went into effect Oct. 18.

“The gift card law was enacted to protect consumers against hidden and unwarranted fees that diminish the balance of gift cards,” Spitzer said. “Those who violate this important consumer protection law will face vigorous prosecution by my office.”

The civil penalty fines can be up to $1,000 per violation, according to a spokeswoman for Spitzer’s office.

At its shopping malls and on its Web site, Simon promotes and sells prepaid gift cards, the spokeswoman said. Simon charges a fee of $1.50 for each card if purchased at its malls or $5.95 for shipping and handling if purchased on the Internet. In addition, Simon charges a $2.50 monthly administrative fee commencing in the seventh month after purchase, a 50-cent fee for each telephone balance inquiry, a $5 fee to reissue a lost or stolen gift card and a $7.50 fee to reissue an expired card. The suit seeks a permanent injunction against the practice.

There are other pending lawsuits against Simon in Massachusetts, Connecticut and New Hampshire for violation of gift card laws, according to the Spitzer spokeswoman.

The New York shopping centers owned and operated by Simon include Roosevelt Field in Garden City, Mall at The Source in Westbury, Walt Whitman Mall in Huntington Station, Smith Haven Mall in Lake Grove, The Westchester in White Plains, Jefferson Valley Mall in Yorktown Heights, Nanuet Mall, Woodbury Common Premium Outlets in Central Valley, Waterloo Premium Outlets in Waterloo and Chautaugua Mall in Lakewood.

Simon Property Group, headquartered in Indianapolis, through its subsidiary partnerships owns or has an interest in 298 properties in North America.

This story first appeared in the February 7, 2005 issue of WWD. Subscribe Today.