Major Department Store Chain Agrees To End Fake Sales

Attorney General Spitzer today announced a settlement with one of the nation’s leading department store chains to resolve an investigation into phony sales promotions.

Kaufmann’s, a division of the May Department Stores Company, operates 51 department stores across the nation, 14 of which are in New York State.

A 15-month investigation revealed that Kaufmann’s advertisements, including those made in newspapers, on television and over the radio, offered many items at "sale" prices, which were, in fact, not sales. Because the advertised merchandise is always or almost always "on sale" at Kaufmann’s the so-called "sale price" is actually the price at which the retailer regularly sells the product.

"Phony sales can lure customers away from competitors and trick consumers into making unwise decisions," Spitzer said. "My office will continue to monitor advertising to help ensure that the public receives truthful and accurate information with which to make good purchasing decisions."

For example, for 28 consecutive weeks, Kaufmann’s offered a KitchenAid mixer at a sale price of $169.99, discounted from its regular price of $219.99. Similarly, for a 16-week period, an entertainment wall unit was promoted at a sale price of $2,999.99, discounted from its "regular price" of $4,350.00.

In addition, a review of Kaufmann’s records confirmed that many products are never sold at "regular prices." For example, during an eight-month period, none of the 1,800 sales of a popular outdoor grill were made at the product’s "regular price." The same was true for the 1,050 sales of a popular watch and 560 sales of a coffeemaker.

Spitzer’s office raised the concern that consumers were being misled into believing that they were receiving some type of discount or bargain. Spitzer also found that the misleading sales promote a sense of urgency to induce consumers to purchase the merchandise before the so-called sale ends.

The Attorney General’s office cites the Federal Trade Commission’s "Guides Against Deceptive Pricing" which prohibits the practice of falsely describing a price as a regular price.

In settling the case, Kaufmann’s agreed not to advertise or sell any item at a "sale" price unless Kaufmann’s has actively and regularly offered the item for sale in the recent course of its business. The company also has agreed to pay $400,000 in civil penalties and costs.

Spitzer has settled similar investigations into fake sales, including agreements with Jos. A. Banks Clothiers last September and The Bon-Ton department stores in 2002.

Individuals wishing to file a complaint about false advertising are encouraged to contact the Attorney General’s consumer help line at (800) 771-7755.

This case was handled by Assistant Attorney General Dennis Rosen and Senior Investigator Peter Eiss of the Buffalo Regional Office.