AG's
office says consumers were deceived by ads, sometimes zero dollars
actually went to charity
Chronicle staff
(SEATTLE,
WA.) —
Washington State Attorney General Bob Ferguson announced
on Wednesday a
consumer protection lawsuit against the for-profit company that owns
Value
Village, alleging that Bellevue-based TVI, Inc. has deceived thousands
of
Washington consumers and donors for more than a decade.
The company is the largest for-profit thrift retailer in the
world, generating
more than $1 billion in annual revenue, said a statement from
Ferguson's
office. It runs 330 stores worldwide and 20 Value Village stores in
Washington
state.
Items from the AG's office statement on the lawsuit:
The
37-page complaint, filed in King County Superior Court,
contains numerous
photos of advertisements used in Washington, and "details the
widespread
deception created by Value Village’s aggressive marketing campaign."
The numerous alleged deceptions mainly involve misleading
consumers and
donors to believe that all types of donations and purchases benefitted
charity,
and creating the impression that Value Village itself is a non-profit
or
charity.
"In fact, no portion of Value Village in-store sales benefits
its
charity partners, and contrary to Value Village's marketing, for years,
some
types of donations — including furniture and housewares — did not
benefit
charities at all. Others provided far less benefit than consumers were
led to
believe, or did not go to the charity indicated to donors. In many
cases, the
donations were in reality pooled and shared among multiple charities."
The lawsuit alleges this conduct violates Washington’s
Consumer Protection
Act, which prohibits unfair or deceptive conduct in the marketplace and
the
Charitable Solicitations Act, which prohibits false, misleading, or
deceptive
charitable solicitations.
“If a for-profit company asked you to donate your couch so it
could donate
zero dollars to charity, you might think twice and decide to donate
your couch
to an actual charitable organization,” Ferguson said. “Value Village
made
millions by deceiving consumers and donors.”
“Every time you donate, you help us support
local nonprofits.”
Value Village’s advertising typically features charity logos
and promises
that purchases will be donated to the specific charities listed. Some
contained
the explicit promise: “Value Village pays local nonprofits every time
you donate.”
For more than a decade, however, that was untrue claims the
AG's office.
Ferguson’s lawsuit alleges this deception is a violation of the
Consumer
Protection Act and Charitable Solicitations Act.
For example, until 2015, Value Village paid no money
whatsoever to charities
for donations of “hard items,” such as furniture, housewares and toys.
In 2015, after the Attorney General’s Office initiated its
investigation,
Value Village began paying charities for these items — typically
pennies per
item, according to Ferguson's statement.
A 2015 contract for one charity outlines the following
reimbursements:
·
Soft goods (such
as clothing and shoes): $0.04 per
pound
·
Miscellaneous
(housewares, toys, books, etc.): $0.02
per pound
·
Furniture and
other large items: $0.02 per item
These amounts are drastically lower than the impression
created by Value
Village’s ads, claims the lawsuit, which create the impression that
charities
receive a significant benefit from donations made at Value Village
stores. The
lawsuit alleges this is deceptive and violates the law.
“Shopping with a smile”
Value Village’s advertising also claims in-store purchases
benefit its
charitable partners. For example, the following public address
announcement
played in stores in 2015:
“We love this neighborhood. So much that we partner
with non-profits
in this very community. You’re helping too, ya know? Your
donations and
purchases help us fund their programs and services. How’s that for
shopping
with a smile?”
This was and is false, claims the suit. Value Village does not
donate any portion
of its sales to charity. The lawsuit alleges these claims are deceptive
under
the Consumer Protection Act and violate the Charitable Solicitations
Act.
Rypien and Moyer branding
During 2014, Value Village solicited donations purportedly
benefitting the
Rypien Foundation at Spokane stores. The company paid Rypien a flat fee
per
month for the use of the foundation’s name and logo, giving customers
the
impression that customer donations would benefit Rypien. However, no
donations
went to Rypien.
The Spokane stores falsely advertised that every time
consumers made
donations, Rypien would benefit.
In 2005, Value Village contracted with the Moyer Foundation, a
charity
founded by former Seattle Mariners pitcher Jamie Moyer. Moyer agreed to
appear
in Value Village’s advertising efforts. In exchange for these
appearances,
Value Village agreed to pay the Moyer Foundation 4.3 cents per pound
for
clothing donated to three Washington stores.
The agreement expired in 2006. Yet, until 2015, the three
stores bore the Moyer
Foundation logo without the foundation's knowledge. Value Village
continued to
claim that donations benefitted the Moyer Foundation without providing
any
payment to the charity. This deceived consumers in violation of the
Consumer
Protection Act and the Charitable Solicitations Act, the lawsuit
alleges.
The company stopped this conduct in 2015, only after the Moyer
Foundation
discovered it.
Complaints, survey show deception worked
An independent study commissioned as part of the investigation
shows that
Value Village’s conduct deceived Washingtonians. More
than 75 percent
of Washingtonians surveyed in a test group believed that the company
was a
charity or nonprofit organization.
When asked to evaluate actual products sold in Value Village
and estimate
how much of an item’s price was provided to a charity, more than 90
percent of
the test group overestimated the amount of money the charity would
receive. The
majority of respondents believed that a charity would receive one
third
or more of the item’s sales price from Value Village,
when in fact no
portion of the sale goes to charity. Depending on the type and amount
of
donation, charities may receive only pennies, or prior to 2015, nothing
at all
from donations.
Consumers have shared their frustration over Value Village’s
practices in
complaints to the Attorney General’s Office.
A Lacey resident wrote:
“The impression any donor
or customer receives is
that Value Village (Savers) is a non-profit giving most of their
profits to xyz
charities. However, not a single store or shift manager in
Thurston,
Pierce, or King County (I went to many just to ask the question, as I
couldn't
find any data on-line) could tell me the actual percentage of income or
profit
or anything about what they actually give to a charity….I have no
affiliation
with any of these stores except as a shopper. However, I believe when
the
public is given the erroneous impression that Value Village is a
non-profit,
the real non-profits, such as Goodwill, suffers from a decreasing
amount of quality
donations.”
Relief and next steps
Ferguson’s lawsuit seeks a court order prohibiting Value
Village from making
misrepresentations to customers and donors including: which charities
benefit
from donations, the amount of donations benefiting charities and that
in-store
sales benefit charity.
TVI has 20 days to respond to the complaint.
"Last week, attorneys for Value Village filed a preemptive
lawsuit
against the Attorney General’s Office in an attempt to avoid
responsibility for
their deceptive acts," says the Ferguson statement. "Value Village’s
lawsuit omits many important details of the Attorney General’s
investigation
and includes several inaccuracies. Ferguson filed
a motion Wednesday to dismiss Value Village’s lawsuit.
Value Village denies accusations
In its own statement issued Wednesday, Value Village said it
paid nearly $13
million to nonprofits in Washington state this past year, and more than
$120
million during the past 10 years. It also produced statements of
support from
the local Big Brothers Big Sisters chapter and the Seattle nonprofit
Northwest
Center, two nonprofits cited in the suit, said The Seattle Times
Sara Gaugl, a company spokeswoman, told the newspaper it was
still reviewing
the complaint but called the AG’s actions “misguided.” She said the
company has
addressed questions from the state during the AG’s investigation for
years.
The company also claims that Ferguson's office wanted a
$3.2 million
settlement even though the request didn’t appear to be connected to any
legal
violations, said the newspaper report.