Kmart is getting a slap on the wrist from the Federal Trade Commission for hiding annoying gift card fees. In a settlement with the FTC, Kmart has agreed to reimburse "dormancy fees" for eligible consumers. You can find details on Kmart’s website, but basically to get a refund you will have to give 1) your Kmart gift card identification number, 2) mailing address, and 3) phone number. If your card did have one of these fees assessed, you’ll get a new gift card for the amount of the fees.
At issue were monthly "inactivity fees." It’s not that these fees are illegal (though some states do ban dormancy fees or have disclosure requirements). Instead, the FTC found issue with the fact that the cards were marketed as "never expiring," yet a $2.10 fee would be assessed each month the card was not used. In case you don’t want to do the math, over two years that adds up to $50.40 in fees.
The FTC says that many consumers didn’t learn of the fees until they went to use their cards.
Unfortunately, I imagine most of these gift card holders no longer have their cards so they can request a refund. Would you have kept yours after you spent the remaining balance or finding out it was practically worthless? (The company stopped charging the dormancy fee March 1, 2006). Still, if you have an older KMart gift card still hanging around it’s worth applying for the refund.
Gerri Detweiler
– Personal finance author, radio host and credit expert. Gerri
contributes budgeting, debt recovery and savings information online.
Gerri Detweiler Credit.com's Personal Finance Expert, Gerri focuses on financial legislation, budgeting, debt recovery and consumer savings information. She is also the co-author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, and Reduce Stress: Real-Life Solutions for Solving Your Credit Crisis as well as host of TalkCreditRadio.comTalk Credit Radio. Reach Gerri at creditexperts@credit.com.
{ 1 comment… add a comment }
Today I found that several consumer groups — US PIRG, Consumers Union, and Consumer Federation of America, also found it ridiculous that consumers were supposed to try to turn in their old gift cards to get a refund. They asked the FTC to require disgorgement of the fees collected through this misleading program. (That means they don’t get to keep the money they made on those dormancy fees just because consumers don’t have their old cards to apply for the refund.) However, the FTC rejected that request.