Levitz chain settles with 8 states for $1.12 million Md. attorney general says furniture retailer deceived customers

June 26, 1996|By Alec Matthew Klein | Alec Matthew Klein,SUN STAFF

Levitz Furniture Corp., the nation's largest specialty furniture retailer, has agreed to pay $1.12 million to Maryland and seven other states to settle claims that the company deceived consumers with false discounts, the state attorney general announced yesterday.

Under the agreement, Levitz did not admit any wrongdoing but agreed to pay penalties to Arizona, California, Connecticut, Missouri, Pennsylvania, Texas and Washington. Maryland, home to Levitz stores in Catonsville, Fullerton, Glen Burnie, Rockville and Suitland, will receive $102,500 in fines from the retailer.

"We're really hoping [this settlement] sends a strong message," said Maryland Attorney General J. Joseph Curran Jr. "Retailers should understand that consumers do have faith in their statements, and retailers should not deceive their customers."

In a joint investigation, the eight states concluded that what Levitz advertised as a "sale" was in fact the retailer's regular price. In the spring of 1995, the Consumer Protection Division of the Maryland attorney general's office found that Levitz placed "sale" prices on items that were never offered at the listed higher price. For instance, authorities say:

A love seat with a "regular" price of $869 was always "on sale" for $669.

A sofa with a "regular" price of $1,049 or more was always "on sale" for 799.99

A five-piece dinette set with a "regular" price of $949 was always "on sale" for $699.99 or less.

"Regular prices were fictitious," said Assistant Attorney General Steven Sakamoto-Wengel.

Levitz officials viewed the settlement differently: "We did not admit to any wrongdoing," said Edward P. Zimmer, Levitz's vice president and general counsel.

But under the settlement, Levitz agreed not to advertise a "regular" price unless the item is available at that price at least 60 percent of the time and more than 20 percent of the item's sales are made at that price.

This is not the first time authorities have penalized Levitz. In March 1995, the retailer agreed to pay $430,000 to Florida for misleading consumers into buying Scotchgard fabric treatment for furniture that already had been treated with the stain inhibitor.

Despite the retailer's recent troubles, at least some analysts who cover the company seemed unimpressed by the latest settlement.

"I think what it means is not that much of anything," said Susan K. Jansen of Alex. Brown & Sons Inc. "The company, along with others in its industry, has been investigated by attorney generals. This is not unique to Levitz."

Even if the settlement does not cause Levitz damage, customers may. The Boca Raton, Fla.-based retailer, which just underwent a change in top management, is already coping with the effects of weak marketing and merchandising at its 68 warehouse-showrooms and 66 satellite stores in 26 states, analysts say.

Pub Date: 6/26/96

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