The Delaware Supreme Court threw out a nearly $7.3 million Superior Court judgment against Overstock.com over unclaimed gift card debt.

The court determined Overstock's failure to properly file escheat between 2010 and 2013 was not proven at trial to be a violation of the Delaware False Claims and Reporting Act because the company's proven actions violate the state's current law, and not the law in place prior to 2013.

Under Delaware law, abandoned property, including unused gift card balances, must be given or paid to the state escheator each year along with reports on that property.

According to the Supreme Court's reversal, Overstock contracted with CardFact Ltd., a company based in Ohio, where gift cards aren't subject to escheat. CardFact handled Overstock's gift card program, making CardFact liable for any unused gift card debt. In 2009, CardFact was sold to Card Compliant, which took over management of the program.

At that time, plaintiff William Sean French worked for Card Compliant. In 2011, he left the company for a job with Kelmar Associates, with which the state of Delaware contracts to handle unclaimed property audits. French brought the action against Overstock in 2013, and Delaware intervened, eventually filing an amended complaint that alleged Overstock had "knowingly made, used or caused to be made or used, false statements to conceal, avoid or decrease an obligation to pay or transmit money to the government."

At trial, the Superior Court instructed the jury that failing to make the required escheat reports was the equivalent of actively making a false statement. The Supreme Court agreed that under the current version of DFCRA, that would be true. However, language broadening that criteria to include knowingly avoiding an obligation to pay or give property to the government was not added to the Delaware statute until 2013, and parties agreed that version of the law wasn't applicable to the period involved in the Overstock case.

In July 2019, a jury concluded at trial that Overstock violated the DFCRA by not filing required escheat reports between 2010 and 2013. Overstock was ordered to pay about $7.27 million in treble damages for the violations, as well as $22,000 in civil penalties.