NEWARK — Attorney General Peter C. Harvey announced today that the Office of the Attorney General and Division of Consumer Affairs have filed suit against Circuit City Stores, Inc., alleging multiple violations of New Jersey’s Consumer Fraud Act and Merchandise Advertising Regulations.

According to Harvey, the State alleges that Circuit City has also violated terms of a 1996 Agreement of Voluntary Compliance with the State, 18 other states, and the District of Columbia. That agreement, under which Circuit City paid $225,000 to New Jersey and the other eight Negotiating States, requires the company to make “clear and conspicuous disclosures in its advertisements of 0% interest financing,” said Division of Consumer Affairs Director Reni Erdos.

Served on Circuit City today, the State’s four-count complaint alleges that Circuit City violated the 1996 Agreement of Voluntary Compliance in four principal areas by:

• Failing to clearly and conspicuously state the number, frequency and approximate minimum payments due during the 0% interest period;
• Failing to clearly and conspicuously state the amount of any minimum purchase required for 0% interest financing;
• Failing to clearly and conspicuously state that 0% interest financing is limited to specific brands or merchandise and failing to identify those brands or merchandise; and
• Failing to clearly and conspicuously state that the consumer will be liable for payment of all interest if the consumer fails to make any required minimum payment due or fails to pay the full purchase price within the 0% interest period.

The State also alleges that Circuit City violated the Consumer Fraud Act and Merchandise Advertising Regulations by:

• Promising, then failing to honor warranties;
• Promising, then failing to honor rebates;
• Advertising items for sale and then failing to have such items available for purchase;
• Advertising that Circuit City will “refund 110% of the difference” between its price and the price of another retailer and then refusing to provide such a refund;
• Failing to include the total selling price on the sales tag on the merchandise;
• Using small print (less than 10-point in size) in footnotes explaining financing and other terms; and
• Placing footnotes on different advertising circular pages from where the item referenced by the footnote appears.

“In the midst of the holiday shopping season, Circuit City’s alleged actions appear designed to prevent customers from getting their money’s worth,” Attorney General Harvey said. “Here we have a company that in 1996 pledged to change its practices and respect consumers, but is still allegedly duping buyers by not clearly and conspicuously informing them of key information. This conduct is not fair to consumers and is especially bad during the holiday season.”

Director Erdos noted that one ad featuring an offer of 0% financing contained an asterisk at the bottom of the page, that in turn referenced another page that explained the terms, conditions and limitations of the offer. Both the asterisk and footnote were in small type less than 10 points in size.

“Instead of ‘Where’s Waldo?’ Circuit City seems to be saying ‘where’s the footnote?’ by their alleged actions,” Director Erdos said. “Learning about financing plans and the costs to a buyer should not involve a hunt through a sales circular, nor should it involve the use of a magnifying glass to read too-small type.”

In addition to paying restitution, the State is seeking penalties of up to $20,000 for each alleged violation.

Investigator Donna Leslie led the investigation into this matter. Deputy Attorney General Nicholas B. Armstrong is representing the State.

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