Florida furniture retailers, under fire for shaky claims in advertising, must now put a disclaimer in certain ads as part of a settlement with state Attorney General Bob Butterworth.
The settlement resolves a lawsuit against Burdines, Bloomingdale's and Macy's, three department store units of Federated Department Stores Inc.
As part of the agreement, Federated will pay the state $300,000 for the cost of the investigation.
Butterworth's staff intends to apply the broader new standard to all retail furniture advertisers and eventually all advertising that promotes retail sales events.
If the merchandise on sale was never offered at the higher "regular" price, the retailer must put a disclaimer in the ad. The tag line must read: "Savings may not be based on actual sales" to caution consumers that discounts might not be as deep as they appear.
The case came after Butterworth's consumer fraud investigators last June accused Burdines of "bogus pricing" when they monitored advertised sale prices on furniture. Investigators found Burdines had never offered the same goods at the higher, regular price listed in the ads.
In one case, a country French dining room set was "on sale" at $999, down from a "regular price" of $1,499. In reality, the furniture had been listed at the lower price for the previous eight months. Yet Burdines' ads called it "the biggest one-day sale and event ever."
The Cincinnati-based company admitted no wrongdoing in settling the case. A Federated spokeswoman deemed the settlement "mutually satisfactory."
In the long run, the decision is actually a victory for promotion-minded retailers. It's a simple disclaimer, unlike longer and more complicated tag lines, which are being considered in other states.
Beyond that, this move clears the way for retailers to hype sales in their ads, as long as they add the disclaimer. Burdines has already been using the disclaimer in its ads. "I have not seen the final document, but based on what they showed us, this new standard is a good solution for both retailers and consumers," said John Rogers, senior vice president of the Florida Retail Federation.
Rogers and other retail officials, along with consumer activists, helped Butterworth's staff develop the new standard.
Butterworth's staff decided after hearing several companies explain the inner workings of retailing that some on-sale bargains are bargains even if they never sold at so-called regular prices. They also feared putting a large regulatory burden on small retailers.
Retailers, who have conditioned consumers to respond to sale and price promotions, have all sorts of ways to put merchandise on sale. Some of it has been marked down because it could not be sold at higher prices. Some of it was purchased inexpensively from manufacturers and the retailer merely passes on the savings. Some of it is clearance merchandise that is out of season or not being made anymore. Prices of some sale merchandise have been cut just to meet or beat competitors prices.
While some states are wrestling with more specific ways to regulate sale advertising, Butterworth's staff was more concerned with getting a disclosure in the ads in "reasonable" size type that leads consumers to comparison shop.
As opposed to false advertising, Burdines was charged with violating Florida's Little FTC act that bars deceptive trade practices that might mislead consumers.
Walter Dartland, Butterworth's special counsel for consumer issues, wanted the simple disclaimer because more complex ones required by some other consumer protection laws are too confusing.
Thanks to the federal Truth-in-Lending law, for instance, auto leasing ads carry a long paragraph of legalese in small type at the bottom of the ad that explains the fine print of the offer that was touted in the headline. In some TV and radio commercials announcers read through the details at mind boggling speed. In some ads announcers even make light of the disclosures with words such as "and now a few words from our attorneys."
"They've made a joke out of the disclosure," Dartland said.