Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, January 5, 1994                   TAG: 9401050073
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: Sandra Brown Kelly
DATELINE:                                 LENGTH: Medium

IF YOU'RE GONNA HAVE A SALE, BETTER BE SURE IT'S REAL

The ad was clipped from a recent newspaper insert for Montgomery Ward & Co. Inc. The Chicago retailer last month promised the Virginia attorney general's office that it would quit using "former" and "regular" reference prices in its advertising unless it had documentation that the items actually had been sold at the higher reference prices before being put on sale.

For instance, if an advertisement says a ring is 70 percent off a "regular," "original" or "former" price, it should be a true discount.

It means that a "substantial" number of the rings were sold at the higher price or were offered for sale at that price as recently as 30 days but not longer than 12 months before being put on sale.

It means that the "regular," "original" or "former" price is based on a markup that does not exceed the store's cost plus a usual and customary markup. The advertisement of sale prices also should carry the dates the item was offered at the higher price.

The documentation requirement means that stores must be able to back up advertised claims with actual sales records. This assures that a sale price isn't just made up or artificially inflated to create the appearance of savings.

By signing an "assurance of voluntary compliance" agreement, Montgomery Ward did not admit that it had violated the state's Comparison Price Advertising Act, but it agreed that as of Feb. 1 it would follow the letter of the law.

The company also is paying the state $70,000, which includes a $50,000 penalty and $20,000 for costs of investigating consumer complaints.

Shoppers in all of the chain's marketing areas are used to seeing discount price claims, but the state's investigation was centered in the Hampton area. The probe also was focused on furniture and jewelry, two types of merchandise in which comparison prices have been most commonly used in the retail industry.

Montgomery Ward is not the only retailer that used questionable comparison prices to lure buyers, although it was among the most conspicuous.

It also is not the only retailer to have dealings with the state over the issue. However, state investigators won't say which businesses are being watched.

The Comparative Price Advertising Act has been in effect since July 1992. Montgomery Ward was the first company the attorney general's office took action against under the code.

"It looks like the state is going to apply the law to everyone," said George Cartledge Jr., president of Grand Piano & Furniture Co. in Roanoke.

"It's about time," said Jean Ann Fox, president of the Virginia Citizens Consumer Council.

The council's 1994 legislative agenda calls for a major overhaul of the Virginia Consumer Protection Act, streamlined and strengthened enforcement and improved funding for it.

The consumer group has a heavy platform of wants. For instance, it will push for merit selection of State Corporation Commission members.

The commissioners "are the most powerful state regulators in the country," yet candidates are "not publicly recruited and interviews are held behind closed doors," Fox said.

Other issues the council will lobby for:

That fines, attorneys' fees and recovered expenses be used to enforce the consumer laws rather than go into the state's general fund.

That banks, utilities and insurance companies be brought under consumer law in areas not regulated by the State Corporation Commission, such as advertising and marketing practices.

That all companies that require advance payments higher than $100, such as dating clubs, be required to post bonds.

That small claims courts be made available to all jurisdictions in the state.

That funding be restored for the toll-free number to the consumer office.

That used-car dealers be required to disclose major known defects in vehicles rather than be allowed to sell cars "as is."

That Social Security numbers be removed as the Virginia driver's identification number.

That telemarketers be required to register with the state, as are charitable solicitors.

That check-cashing businesses be regulated by the Bureau of Financial Institutions.