Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, December 23, 1993 TAG: 9312230051
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Medium
Investigators found that the higher "regular" and "former" prices the department store used in advertising of items on "sale" were not legitimate because items had not been sold at those prices.
The state found that the chain's "sale" prices were, in fact, its everyday prices on furniture and jewelry. However, comparison of the "sale" price to the false prices led consumers to believe they were getting a discount.
A state law says companies cannot use "reference" prices unless the merchandise actually was sold at those prices for at least 30 days before being put on sale.
This was the state's first enforcement action since the law went into effect in July 1992.
Attorney General Stephen Rosenthal said that although the investigation concentrated on a few of the Chicago-based chain's stores - mainly those in the Hampton area - the practices found there applied to the Montgomery Ward stores throughout the state.
He declined to say if any other retailers are under investigation.
"I hope frankly it's the last one we have to do," Rosenthal said. "I hope this will send a strong enough message."
Rosenthal said Montgomery Ward's practice of advertising false regular and sale prices was "not only a serious misrepresentation at the buyer's expense, it's asinine and shortsighted."
"I simply do not understand why any business dependent upon consumers for their lifeblood would intentionally take actions that violate trust and confidence," he said.
The $70,000 the company is paying includes $20,000 to reimburse the state for its investigation and legal costs. The remainder goes to the state's fund for school construction.
The settlement, which was filed Wednesday in the Circuit Court of Hampton, was voluntary. The company did not admit any wrongdoing.
Sarina Butler, Montgomery Ward spokeswoman, said whatever changes need to be made to satisfy the state will be made by the Feb. 1 deadline for compliance.
"There already have been some changes," Butler said, but did not specify what the retailer has done to satisfy the law.
She said any changes in advertising would not be national in scope but done for its regional operations that comprise Virginia, Maryland, the District of Columbia and North Carolina.
Butler did say, though, that Montgomery Ward has a "similar matter" pending in California.
by CNB