Federal Register / Vol. 72, No. 51 / Friday, March 16, 2007 / Notices 12613 

1The comment must be accompanied by an 

explicit request for confidential treatment, 

including the factual and legal basis for the request, 

and must identify the specific portions of the 

comment to be withheld from the public record. 

The request will be granted or denied by the 

Commission’s General Counsel, consistent with 

applicable law and the public interest. See 

Commission Rule 4.9(c), 16 CFR 4.9(c). 

A. Federal Reserve Bank of Cleveland 

(Douglas A. Banks, Vice President) 1455 

East Sixth Street, Cleveland, Ohio 

44101-2566: 

1. LNB Bancorp, Inc., Lorain, Ohio; to 

merge with Morgan Bancorp, Inc., and 

thereby indirectly acquire Morgan Bank, 

N.A., both of Hudson, Ohio. 

Board of Governors of the Federal Reserve 

System, March 12, 2007. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. E7–4792 Filed 3–15–07; 8:45 am] 

BILLING CODE 6210–01–S 

FEDERAL RESERVE SYSTEM 

Formations of, Acquisitions by, and 

Mergers of Bank Holding Companies 

The companies listed in this notice 

have applied to the Board for approval, 

pursuant to the Bank Holding Company 

Act of 1956 (12 U.S.C. 1841 et seq.) 

(BHC Act), Regulation Y (12 CFR Part 

225), and all other applicable statutes 

and regulations to become a bank 

holding company and/or to acquire the 

assets or the ownership of, control of, or 

the power to vote shares of a bank or 

bank holding company and all of the 

banks and nonbanking companies 

owned by the bank holding company, 

including the companies listed below. 

The applications listed below, as well 

as other related filings required by the 

Board, are available for immediate 

inspection at the Federal Reserve Bank 

indicated. The application also will be 

available for inspection at the offices of 

the Board of Governors. Interested 

persons may express their views in 

writing on the standards enumerated in 

the BHC Act (12 U.S.C. 1842(c)). If the 

proposal also involves the acquisition of 

a nonbanking company, the review also 

includes whether the acquisition of the 

nonbanking company complies with the 

standards in section 4 of the BHC Act 

(12 U.S.C. 1843). Unless otherwise 

noted, nonbanking activities will be 

conducted throughout the United States. 

Additional information on all bank 

holding companies may be obtained 

from the National Information Center 

website at www.ffiec.gov/nic/. 

Unless otherwise noted, comments 

regarding each of these applications 

must be received at the Reserve Bank 

indicated or the offices of the Board of 

Governors not later than April 12, 2007. 

A. Federal Reserve Bank of Boston 

(Richard Walker, Community Affairs 

Officer) P.O. Box 55882, Boston, 

Massachusetts 02106-2204: 

1. MountainOne Financial Partners, 

MHC and MountainOne Financial 

Partners, Inc., both of North Adams, 

Massachusetts; to acquire 100 percent of 

the voting shares, and thereby merge 

with South Coastal Holdings, MHC and 

its subsidiary bank, South Coastal Bank, 

both of Rockland, Massachusetts. 

B. Federal Reserve Bank of Kansas 

City (Donna J. Ward, Assistant Vice 

President) 925 Grand Avenue, Kansas 

City, Missouri 64198-0001: 

1. Dickinson Financial Corporation II 

and Dickinson Financial Corporation, 

both of Kansas City, Missouri; to acquire 

100 percent of the voting shares of 

SunBank, N.A., Phoenix, Arizona (in 

organization). 

C. Federal Reserve Bank of Dallas 

(W. Arthur Tribble, Vice President) 2200 

North Pearl Street, Dallas, Texas 75201- 

2272: 

1. Bozka Investments, Ltd., 

Hallettsville, Texas, to become a bank 

holding company by acquiring 15.63 

percent of Peoples State Bank of 

Hallettsville, Hallettsville, Texas. 

Board of Governors of the Federal Reserve 

System, March 13, 2007. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. E7–4828 Filed 3–15–07; 8:45 am] 

BILLING CODE 6210–01–S 

FEDERAL TRADE COMMISSION 

[File No. 062 3088] 

Kmart Corporation, Kmart Services 

Corporation, and Kmart Promotions, 

LLC; Analysis of Proposed Consent 

Order To Aid Public Comment 

AGENCY: Federal Trade Commission. 

ACTION: Proposed Consent Agreement. 

SUMMARY: The consent agreement in this 

matter settles alleged violations of 

Federal law prohibiting unfair or 

deceptive acts or practices or unfair 

methods of competition. The attached 

Analysis to Aid Public Comment 

describes both the allegations in the 

draft complaint and the terms of the 

consent order—embodied in the consent 

agreement—that would settle these 

allegations. 

DATES: Comments must be received on 

or before April 10, 2007. 

ADDRESSES: Interested parties are 

invited to submit written comments. 

Comments should refer to ‘‘Kmart 

Corporation, File No. 062 3088,’’ to 

facilitate the organization of comments. 

A comment filed in paper form should 

include this reference both in the text 

and on the envelope, and should be 

mailed or delivered to the following 

address: Federal Trade Commission/ 

Office of the Secretary, Room 135–H, 

600 Pennsylvania Avenue, NW., 

Washington, DC 20580. Comments 

containing confidential material must be 

filed in paper form, must be clearly 

labeled ‘‘Confidential,’’ and must 

comply with Commission Rule 4.9(c). 

16 CFR 4.9(c) (2005).1 The FTC is 

requesting that any comment filed in 

paper form be sent by courier or 

overnight service, if possible, because 

U.S. postal mail in the Washington area 

and at the Commission is subject to 

delay due to heightened security 

precautions. Comments that do not 

contain any nonpublic information may 

instead be filed in electronic form as 

part of or as an attachment to email 

messages directed to the following email box: consentagreement@ftc.gov. 

The FTC Act and other laws the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. All timely and responsive 

public comments, whether filed in 

paper or electronic form, will be 

considered by the Commission, and will 

be available to the public on the FTC 

Web site, to the extent practicable, at 

http://www.ftc.gov. As a matter of 

discretion, the FTC makes every effort to 

remove home contact information for 

individuals from the public comments it 

receives before placing those comments 

on the FTC Web site. More information, 

including routine uses permitted by the 

Privacy Act, may be found in the FTC’s 

privacy policy, at http://www.ftc.gov/ 

ftc/privacy.htm. 

FOR FURTHER INFORMATION CONTACT: 

Peggy Twohig or Alice Saker Hrdy, 

Bureau of Consumer Protection, 600 

Pennsylvania Avenue, NW., 

Washington, DC 20580, (202) 326–3224. 

SUPPLEMENTARY INFORMATION: Pursuant 

to section 6(f) of the Federal Trade 

Commission Act, 38 Stat. 721, 15 U.S.C. 

46(f), and § 2.34 of the Commission 

Rules of Practice, 16 CFR 2.34, notice is 

hereby given that the above-captioned 

consent agreement containing a consent 

order to cease and desist, having been 

filed with and accepted, subject to final 

approval, by the Commission, has been 

placed on the public record for a period 

of thirty (30) days. The following 

Analysis to Aid Public Comment 

describes the terms of the consent 

agreement, and the allegations in the 

complaint. An electronic copy of the 


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12614 Federal Register / Vol. 72, No. 51 / Friday, March 16, 2007 / Notices 

full text of the consent agreement 

package can be obtained from the FTC 

Home Page (for March 12, 2007), on the 

World Wide Web, at http://www.ftc.gov/ 

os/2007/03/index.htm. A paper copy 

can be obtained from the FTC Public 

Reference Room, Room 130–H, 600 

Pennsylvania Avenue, NW., 

Washington, DC 20580, either in person 

or by calling (202) 326–2222. 

Public comments are invited, and may 

be filed with the Commission in either 

paper or electronic form. All comments 

should be filed as prescribed in the 

ADDRESSES section above, and must be 

received on or before the date specified 

in the DATES section. 

Analysis of Agreement Containing 

Consent Order To Aid Public Comment 

The Federal Trade Commission has 

accepted, subject to final approval, an 

agreement containing a consent order 

from Kmart Corporation, Kmart Services 

Corporation, and Kmart Promotions, 

LLC (collectively, ‘‘respondents’’). 

The proposed consent order has been 

placed on the public record for thirty 

(30) days for receipt of comments by 

interested persons. Comments received 

during this period will become part of 

the public record. After thirty (30) days, 

the Commission will again review the 

agreement and the comments received, 

and will decide whether it should 

withdraw from the agreement or make 

final the agreement’s proposed order. 

Respondents advertise, sell, and 

distribute the Kmart Gift Card through 

their retail stores and Internet Web site, 

http://www.Kmart.com. The Kmart Gift 

Card is a plastic, stored-value card, 

similar in size and shape to a credit or 

debit card, that can be used to purchase 

goods or services from Kmart retail 

locations. This matter concerns the 

respondents’ alleged failure to disclose, 

or failure to disclose adequately, 

material terms and conditions of the 

Kmart Gift Card as well as a deceptive 

claim regarding the Kmart Gift Card. 

The Commission’s complaint alleges 

that, in the advertising and sale of 

Kmart Gift Cards, respondents have 

represented, expressly or by 

implication, that a consumer can 

redeem a Kmart Gift Card for goods or 

services of an equal value to the 

monetary amount placed on the card. 

Respondents have failed to disclose, or 

failed to disclose adequately, that, after 

24 consecutive months of non-use, a 

$2.10 fee is deducted, for each of the 

past 24 months, and again for each 

successive month of continued 

inactivity, from the value of the Kmart 

Gift Card. The proposed complaint 

alleges that the failure to disclose 

adequately this material fact is a 

deceptive practice. 

The complaint also alleges that 

respondents have represented on the 

Kmart.com Web site that the Kmart Gift 

Card never expires. In truth and in fact, 

after 24 months of non-use, the 

application of the Kmart Gift Card 

dormancy fee causes any Kmart Gift 

Card valued at less than $50.40 to 

expire. The complaint alleges that the 

representation that the Kmart Gift Card 

never expires is false and misleading. 

The proposed consent order contains 

provisions designed to prevent 

respondents from engaging in similar 

acts and practices in the future. 

Part I.A. of the proposed order 

prohibits respondents from advertising 

or selling Kmart Gift Cards without 

disclosing, clearly and prominently: (a) 

The existence of any expiration date or 

automatic fees, in all advertising, and 

(b) all material terms and conditions of 

any expiration date or automatic fee, at 

the point of sale and prior to purchase. 

The effect of this provision is to require 

respondents to alert consumers to 

potential fees and expiration dates 

during advertising, and to fully disclose 

all relevant details at the point of sale, 

before consumers purchase the gift 

cards. 

Part I.B. of the proposed order 

prohibits respondents from advertising 

or selling Kmart Gift Cards without 

disclosing, clearly and prominently the 

existence of any automatic fee or 

expiration date on the front of the gift 

card. 

Part II of the proposed order prohibits 

respondents from making any 

misrepresentation about any material 

term or condition associated with the 

Kmart Gift Card. 

Part III.A. of the proposed order 

prohibits respondents from collecting or 

attempting to collect any dormancy fee 

on any Kmart Gift Card activated prior 

to the date of issuance of the proposed 

order. 

Part III.B. of the proposed order 

requires respondents to create, 

maintain, and distribute a written policy 

to reimburse consumers whose gift 

cards were diminished by fees. The 

policy: (1) Must specify a toll free 

number, a valid email address and a 

postal address that consumers can use 

to complete a request for reimbursement 

of dormancy fees from Kmart; (2) must 

be clearly and prominently disclosed on 

Kmart’s web site for two years from the 

issuance of the order; (3) must be 

disclosed to anyone who complains or 

inquires to Kmart about a gift card 

balance; and (4) requires reimbursement 

to any eligible consumer who (a) 

contacts Kmart by phone, email, or 

postal mail, and (b) provides a Kmart 

gift card number, a mailing address, and 

a phone number. Once a consumer 

provides the required information, 

Kmart must issue a reimbursement 

within 10 business days, provided 

however, that for thirty (30) days after 

issuance of the order, respondents shall 

issue a reimbursement within fifteen 

(15) business days. 

Part IV of the proposed order contains 

a document retention requirement, the 

purpose of which is to ensure 

compliance with the proposed order. It 

requires that respondents maintain 

accounting and sales records for the 

Kmart Gift Card, copies of ads and 

promotional material that contain 

representations covered by the proposed 

order, complaints and refund requests 

relating to the Kmart Gift Card, and 

other materials that were relied upon by 

respondents in complying with the 

proposed order. 

Part V of the proposed order requires 

respondents to distribute copies of the 

order to various principals, officers, 

directors, and managers of respondents 

as well as to the officers, directors, and 

managers of any third-party vendor who 

engages in conduct related to the 

proposed order. 

Part VI of the proposed order requires 

respondents to notify the Commission of 

any changes in corporate structure that 

might affect compliance with the order. 

Part VII of the proposed order requires 

respondents to file with the Commission 

one or more reports detailing 

compliance with the order. 

Part VIII of the proposed order is a 

‘‘sunset’’ provision, dictating the 

conditions under which the order will 

terminate twenty years from the date it 

is issued or twenty years after a 

complaint is filed in Federal court, by 

either the United States or the FTC, 

alleging any violation of the order. 

The purpose of this analysis is to 

facilitate public comment on the 

proposed order. It is not intended to 

constitute an official interpretation of 

the proposed order or to modify in any 

way its terms. 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

Statement of Commissioners Pamela 

Jones Harbour and Jon Leibowitz 

(Concurring in Part and Dissenting In 

Part) 

Today, the Commission approves for 

public comment a proposed consent 

agreement with Kmart Corporation and 

two of its subsidiaries (collectively, 

‘‘Kmart’’) to settle charges that Kmart 

misrepresented material aspects of its 


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Federal Register / Vol. 72, No. 51 / Friday, March 16, 2007 / Notices 12615 

2 Kmart applied a dormancy fee of $2.10 per 

month to the balance of every Kmart gift card that 

went unused for 24 months—both retroactively 

($50.40) and prospectively. Consequently, cards 

worth $50 or less were rendered worthless if 

unused for two years. Imagine stashing a $10, $25 

or $50 gift card in a drawer and then pulling it out 

two years later for a trek to shop at Kmart, only to 

learn at the check-out counter that the card had no 

value. Kmart recently discontinued charging this 

dormancy fee after learning about the FTC’s 

investigation, but only on a prospective basis. 

3Press Release, Nat’l Retail Fed’n, Gift Card 

Spending Surpassed Expectations as Last-Minute 

Shoppers Looked for Quick, Easy Gifts; Most 

Consumers Have Spent Less Than Half of Card 

Values (Jan. 23, 2007). 

4Commission consent orders have required 

advertisers to pay redress, offer refunds, or disgorge 

profits, and it is appropriate to do so here. See, e.g., 

Hi-Health Supermart Corp., FTC Dkt. No. C–4136 

(May 12, 2005) (requiring $450,000 in redress); 

ValueVision Int’l, Inc., FTC Dkt. No. C–4022 (Aug. 

24, 2001) (requiring company to offer refunds to all 

purchasers of the challenged products); Weider 

Nutrition Int’l, Inc., FTC Dkt. No. C–3983 (Nov. 17, 

2000) (requiring $400,000 in redress); Dura Lube, 

Inc., FTC Dkt. No. D–9292 (May 5, 2000) (requiring 

$2 million in redress); Apple Computer, Inc., FTC 

Dkt. No. C–3890 (Aug. 6, 1999) (requiring company 

to honor representation that customers would 

receive free support for as long as they own the 

product); Azrak-Hamway Int’l, Inc., 121 F.T.C. 507 

(1996) (requiring toymaker to offer refunds); L & S 

Research Corp., 118 F.T.C. 896 (1994) (requiring 

$1.45 million in disgorgement). 

5 119 Cong. Rec. 29480 (1973). 

1The comment must be accompanied by an 

explicit request for confidential treatment, 

including the factual and legal basis for the request, 

and must identify the specific portions of the 

comment to be withheld from the public record. 

The request will be granted or denied by the 

Commission’s General Counsel, consistent with 

applicable law and the public interest. See 

Commission Rule 4.9(c), 16 CFR 4.9(c). 

gift cards and failed to disclose that, 

after two years of non-use, Kmart would 

deduct a $50 fee from the gift card and 

a $2.10 monthly fee thereafter. We 

concur in the Commission’s decision to 

bring an action against Kmart, but 

dissent in part from the proposed 

consent agreement because we believe 

the remedy should include 

disgorgement of ill-gotten profits. 

Otherwise, Kmart will remain unjustly 

enriched by a substantial amount of 

buried ‘‘dormancy fees’’ while many 

consumers will have lost the chance for 

reimbursement because they long ago 

threw out their seemingly worthless gift 

cards in frustration.2

Gift cards have become enormously 

popular with consumers and generated 

nearly $28 billion in sales during the 

2006 holiday season.3 Gift card 

dormancy fees and expiration dates are 

material restrictions that affect the value 

of the cards. These restrictions must be 

clearly disclosed so that consumers can 

make informed decisions, whether they 

are purchasing the cards or receiving 

them as a gift. 

The proposed order settles the 

Commission’s allegations that Kmart 

deceptively advertised its gift cards by, 

among other things, misrepresenting the 

existence of any expiration dates or fees 

associated with the cards. Not only did 

Kmart claim that the gift cards could be 

used ‘‘like cash at all Kmart locations,’’

but its Web site also affirmatively 

misled consumers by stating that the 

Kmart gift cards ‘‘never expire.’’ We 

agree that Kmart’s alleged conduct 

justifies the order’s injunctive 

provisions. 

But we believe the order should go 

further. It should require Kmart to 

disgorge the profits of its unlawful 

behavior, provide more complete 

consumer redress, or a combination of 

both.4 More than three decades ago, in 

sponsoring the Magnuson-Moss Act 

extending the Commission’s authority 

under Section 19 to obtain monetary 

remedies, Senator Magnuson explained 

that the Commission cannot ‘‘rely 

merely upon a slap of the violator’s 

wrist to maintain fair play in the 

marketplace’’ and that ‘‘[a] mere ceaseand-desist order has frequently let a 

wrongdoer keep his ill-gotten gains.’’ 5

The same rationale holds true today. 

In this case, Kmart deducted 

dormancy fees from consumers’ gift 

cards. It failed to give adequate notice. 

In many instances, Kmart’s actions 

rendered unused or partially used cards 

valueless, at significant monetary 

benefit to Kmart but considerable 

monetary detriment to consumers. The 

proposed consent order, in our opinion, 

stops the deceptive practices but does 

not completely cure the consumer 

injury or fully excise Kmart’s ill-gotten 

gains. Pursuant to the order, Kmart may 

not assess additional dormancy fees on 

previously activated gift cards and must 

reimburse previously assessed 

dormancy fees if consumers complain 

and can provide the gift card number. 

Many consumers no doubt already have 

thrown out their gift cards and will have 

no remedy under this settlement. 

Moreover, the order does not require 

Kmart automatically to restore 

previously deducted dormancy fees 

(absent consumer inquiries) or disgorge 

the windfall profits it made from these 

fees. Although Kmart’s reimbursement 

practices have been improved by the 

Commission’s efforts, in our opinion the 

refund policy, without additional 

monetary relief, is still too little, too 

late. 

We commend staff for pursuing 

Kmart’s failure to disclose its gift card 

dormancy fees and for challenging 

Kmart’s affirmative misrepresentations 

that its gift cards do not expire. For the 

foregoing reasons, however, we 

respectfully dissent in part from the 

proposed order. 

[FR Doc. E7–4798 Filed 3–15–07; 8:45 am] 

BILLING CODE 6750–01–P 

FEDERAL TRADE COMMISSION 

[File No. 061 0026] 

Missouri Board of Embalmers and 

Funeral Directors; Analysis of 

Agreement Containing Consent Order 

To Aid Public Comment 

AGENCY: Federal Trade Commission. 

ACTION: Proposed consent agreement. 

SUMMARY: The consent agreement in this 

matter settles alleged violations of 

Federal law prohibiting unfair or 

deceptive acts or practices or unfair 

methods of competition. The attached 

Analysis to Aid Public Comment 

describes both the allegations in the 

draft complaint and the terms of the 

consent order—embodied in the consent 

agreement—that would settle these 

allegations. 

DATES: Comments must be received on 

or before April 9, 2007. 

ADDRESSES: Interested parties are 

invited to submit written comments. 

Comments should refer to ‘‘Missouri 

Board of Embalmers and Funeral 

Directors, File No. 061 0026,’’ to 

facilitate the organization of comments. 

A comment filed in paper form should 

include this reference both in the text 

and on the envelope, and should be 

mailed or delivered to the following 

address: Federal Trade Commission/ 

Office of the Secretary, Room 135–H, 

600 Pennsylvania Avenue, NW., 

Washington, DC 20580. Comments 

containing confidential material must be 

filed in paper form, must be clearly 

labeled ‘‘Confidential,’’ and must 

comply with Commission Rule 4.9(c). 

16 CFR 4.9(c) (2005).1 The FTC is 

requesting that any comment filed in 

paper form be sent by courier or 

overnight service, if possible, because 

U.S. postal mail in the Washington area 

and at the Commission is subject to 

delay due to heightened security 

precautions. Comments that do not 

contain any nonpublic information may 

instead be filed in electronic form as 

part of or as an attachment to e-mail 

messages directed to the following email box: consentagreement@ftc.gov. 

The FTC Act and other laws the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. All timely and responsive 


sroberts on PROD1PC70 with NOTICES