A lawsuit against American Express Co. has focused new scrutiny on network-branded prepaid gift cards, which are highly popular among consumers but still hampered by hidden fees, complicated disclosures, and difficulties with merchant acceptance.

The New York company said last week that it has been trying to help merchants access software that has been available for several years to let them check the remaining balance, enabling customers to use the cards for purchases that exceed their value and cover the difference another way.

All the networks have developed systems that let merchants or consumers check card balances, thus enabling "split-tender" transactions, in which the gift card is exhausted and the rest of the purchase is paid with cash, check, or another card. Many major retailers can conduct split transactions, but there are plenty of small merchants that have not installed the necessary technology.

One affected consumer, J.L. Goodman, is seeking class-action status for her suit against Amex, as well as damages of at least $5 million.

Ms. Goodman filed the suit in June. Last month she filed an amendment in the U.S. District Court for the Eastern District of New York, claiming that Amex "never disclosed to members of the class that retailers would not accept the Amex gift cards uniformly as partial payment for goods and services" and "was unjustly enriched by its practices and its failure to require retailers with which it had contractual relationships to uniformly accept gift cards."

The lawsuit is based on her experience with a $100 Amex-branded gift card she purchased in 2006 to give to her daughter-in-law, Robin London. When $2.75 was left on the card, several merchants refused to accept it in a split transaction. The card's remaining value was eventually depleted by Amex's $2-a-month servicing fee, which kicks in 12 months after a card is activated.

Robert A. Sherman, a spokesman for Amex, said last week that he would not discuss pending litigation. But he did say that the split-transaction fix is "something that we continue to work on," and that "we take the problem very seriously."

Since the "partial authorization" system was introduced in 2005, Target Corp., Walgreen Co., Best Buy Co., and Neiman Marcus Group Inc. have all installed it, he said, as well as several other retailers that he would not identify.

"We're focusing on the top 20" retailers, and then "we'll continue to work our way down the list," Mr. Sherman said.

Amex's partial authorization software can be installed during a regular upgrade of the merchant's overall point of sale system, he said, but it is up to the retailer to decide when they have the money and time to undertake such a project.

"There are some growing pains," Mr. Sherman said. "We and our retail partners are very focused on this." The issue "is a customer experience issue for them, as well," because consumers who cannot use their gift cards in split transactions have a "negative experience that has an impact on the retailer as well as American Express."

Richard D. Greenfield of the New York law firm Greenfield & Goodman LLC, one of Ms. Goodman's attorneys, said in an interview last week that he did not know the exact number of merchants who rejected the gift card in question.

Ms. London "tried using it in Manhattan and several other locations unsuccessfully," Mr. Greenfield said. "We know from our own investigating that it is a very widespread problem," he said.

The court has ordered the discovery period of the suit to proceed, requiring a response from Amex.

Daniel Horne, a marketing professor at Providence College in Rhode Island, said last week that he had been contacted by other plaintiffs' attorneys who had considered bringing similar lawsuits. "This lawsuit was coming — it's just a matter of who was going to file" first.

Prof. Horne, who has conducted studies for the Network Branded Prepaid Card Association, an industry trade group, said 150 million open-loop gift cards with a total value of about $15 billion were sold last year.

His survey of over 8,000 U.S. consumers in February found that about 15% to 20% of all gift cards sold now are open-loop, or network-branded, and the consumers he polled indicated that they would purchase more than twice as many gift cards in the coming holiday season than they did last year.

The network-branded prepaid card industry is currently thriving, Prof. Horne said, but he expressed concerns about the impact the suit could have.

"Something like this has the potential to slow it down," he said. "You don't want to damage your brand equity by doing something that in the consumer's view is anti-consumer."

According to the advocacy group Consumers Union, several states have laws banning or limiting monthly fees and expiration dates on gift cards, especially the closed-loop ones sold by specific retailers.

In 2004, Sen. Charles Schumer, D-N.Y., filed a bill that would have limited expiration dates and fees for general-use and store-specific gift cards; the legislation never made it out of committee.

Prof. Horne said that as a result of both the state laws and Sen. Schumer's proposal, most retailers eliminated fees and expiration dates from their closed-loop gift cards. "The stores, because of the potential negative impact, changed their policies. They got rid of their expiration dates, they got rid of their dormancy fees," and "the problem kind of went away."

But eliminating those fees would be less of an option for the network-branded bank cards, which have a different revenue model, he said, though he hopes that Ms. Goodman's suit would prompt the card companies to focus more on self-regulation, rather than being forced to change by outside agencies.

"One of the problems here is, if there's a lot of negative publicity, and the credit card companies do not appear to act, then somebody's going to come along and make this a legislative issue, or consumers are going to come along and say this is a rip-off," Prof. Horne said.

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